Home Interview How TSA Policy ruined businesses in 2016—Finance Expert + Why Govt. must relax 60% of the policy in 2017

How TSA Policy ruined businesses in 2016—Finance Expert + Why Govt. must relax 60% of the policy in 2017

How TSA Policy ruined businesses in 2016—Finance Expert + Why Govt. must relax 60% of the policy in 2017
Lukeman Oyewole Lawal, President, Ultimate Youth Dream Initiative

Treasury Single Account (TSA) a financial policy introduced by the Federal Government of Nigeria
in 2012 was brought to perfect use in 2015 after the swearing in of the new
anti-corruption regime of President
Muhammadu Buhari.
One of the cardinal points of the policy is to consolidate
all financial inflows from the country’s ministries, departments and agencies
(MDAs) by way of deposit into commercial banks, traceable into a single account
(Consolidate Revenue Account) at the Central
Bank of Nigeria
(CBN) Since the adoption of the policy by Mr. Buhari, it has among many other things curb corruption in public
organizations. For instance, TSA helps check incidence of multiple accounts
operated by government MDAs. It ensure adequate monitoring of government
revenue, receipts and expenditures  and
block leakages  as no MDA is allowed to
keep any operational account.  Under the
TSA policy, Deposit Money Banks (DMB) using public sector funds deposited by
MDAs to make free profits are forbidden.
However, looking at the incidence of
bureaucratic delays associated with disposable revenues by the CBN to the MDAs and
the several impacts of the policy in year 2016, LUKEMAN OYEWOLE LAWAL, a
financial expert and President of the Ultimate
Youth Dream Initiative
, a socio-economic analyst and policy assessment
organization reviewed the TSA policy on the last day of December, 2016 (December
31st) and labeled the policy as the reason for many job losses,
suicide killings and organizational bankruptcy that characterized year 2016.

Lookman Oyewole Lawal
who is equally a Lagos State House of Assembly
Aspirant in Surulere Constituency 1 of Lagos (South Western Nigeria) during the
2015 election believes that the policy did more harm to the Nigerian system
than good. Mr. Lawal equally took a
swipe at President Muhammad Buhari’s
2017 budget labeling it a budget with no affection for ‘the Household’. He
spoke to Asabeafrika inside his
Lagos home on the last day of year 2016. His analysis is the TSA is quire fiery
and revealing. You have not read this anywhere before.  Enjoy the excerpts. 

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The GDA meets Mr. Lukeman Oyewole Lawal for the December 31st Encounter


Your organization, Ultimate Youth
Dream Initiative has always given a kind of audit and policy review on
government policies at states and national level in the last 5 years. Sir,
today is December 31st and looking at 2016, how would you describe
the year in terms of government’s policies as it reflects on the ordinary
Thank you
very much. Year 2016 has come and it is winding up now. I must say it has been
a very tough, a very difficult year, and I will say that with every sense of
responsibility in me. If anyone is to evaluate any government or any polity,
there are certain indicators that easily come to mind. Number one is the rate
of unemployment. If we look back at the year 2015 when this new government came
on board, unemployment and underemployment was put at 22.4 million. As we speak
today, it is on the verge of 30 million and that is telling us that over 6
million jobs have been lost between May 29, 2015 and December 31st,
2016. In the course of this year alone, about 5.4 to 5.6 million jobs, I mean
full time jobs, have been lost. We can make up our minds on that. Another
indicator anyone will look at is the poverty rate. Today, the United Nations’
World Economic Report says that over 60% of our population is living below the
poverty line. That is about a hundred and twenty million people, they also
scored us on employment as well. Over 64% of active youth population is in the
unemployment circle. Another indicator to look at is the ease of doing business;
on that index, we are 169 out of 189. Last year, we were 170, so, we have moved
a step ahead. But in critical terms, I don’t see any improvement across
different sectors, industries like manufacturing, trading and service
rendering. This is a year (2016) when industrial players have lost over 1.4
trillion to foreign exchange fluctuations and it is so painful. We will also
look at other areas such as members of the house-hold. It is
very painful that in our clime, we do not consider members of the household or the average household when we make
policy formulations, when we make programs and when we conceive projects.

Lukeman Oyewole Lawal, very angry with the result of TSA on ordinary Nigerians

over the world, it is a tripod of the government, the firms and the household.
At every point in time, people in government must enact laws because the laws
are the fundamental instrumentality of governance, you must
enact laws that would impact positively on the members of the household. Policy
makers as well, must at every point in time, formulate policies, evolve
programs and projects that will impact positively on members of the household
because all over the world like I said, where companies go ahead to produce, it
is members of the household that will buy. We must ensure that income is put in
the hands of members of the household. The government is at the driver’s seat
to ensure at every point in time that members of the household are not
impoverished.  The disposable income as
we are talking today is grossly eroded. The purchasing power is almost nil. Then,
we now talk about the Treasury Single Account; I am very particular about that

GDA meets Lukeman Oyewole Lawal

Before we go to the issue of the TSA,
you just mentioned the tripod that is very germane to policy making in every
sane society which is the Government, the Firms and the Household. Do you think
President Muhammadu Buhari’s government is sensitive to these three especially
the last leg, Household?
I must be
very sincere, we seem to have a huge disconnect with the people at the
leadership echelon. We don’t have the simple idea of what good governance
should be about. If you are running my affairs in trust, I have given you the
mandate to run my affairs in trust, you must hundred percent ensure that my
socio-economic well-being is guaranteed.

Ex-President Goodluck Jonathan….’Signed TSA Policy into law’

You must ensure as enshrined in
section 14 (2B) of our constitution; the primary purpose of government is
security and welfare of the people; and so, everything that concerns
socio-economic well being is the business of government, weather it is food,
weather it is shelter, weather it is education, weather it is housing, weather
it is transport, weather it is employment. All spheres of human existence are
the business of the government. And if we are in a recession, look, I don’t
want to go back to the reasons why we are here. But, what are we doing to get
out of where we are? How much are we sensitive to the plight of those people
that have lost those jobs? As I am talking to you now, in this country,
everybody that is in full time employment has nothing less than 3 to 5 dependants
that they will remit money to, weather old or younger dependents, directly and

President Muhammad Buhari….Activated the TSA policy fully under his reign

That is what is obtainable in this clime. And so, if we have taken
jobs off additional 5.6 to 6 million people in a year, multiply that by three
and you will discover that additional 18 million to 20 million people are going
to bed hungry. Now, we hear of people committing suicides because of six
thousand Naira, not to talk of the various state governments that owe salaries.
So, for me, we must put on our thinking caps, we have heard the new budget of
over Seven
trillion Naira
to be spent. We have applauded it but as we speak, I
cannot see the right mechanism or structures in place that can gratify somebody
like me, a chartered accountant, a governance and social researcher to go to
bed and say ‘yes, I am expecting something positive in 2017’.

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Mr. Lawal explaining a point to the GDA
Before we go back to the positivism
of 2017, you will agree with me that one of the hallmarks of this government in
2016 is the signing of the Treasury Singular Account (TSA) into action which
culminated in the shortage of corruptive acts in public sector. How would you
applaud TSA as a Social Researcher?
Thank you
very much. The Treasury Single Account
is not a new thing. It is not something that other countries have not adopted
before. But when we are trying to adopt new policies, it is very good for us to
do a pre-impact-assessment.
(Cuts in)What do you mean by
Pre-Impact Assessment?

Lukeman Oyewole Lawal to Asabearika….’I beg government to stop adopting policies that impoverishes Nigerians’

Thank you
very much; it is very painful when we adopt policies that would impoverish
majority of members of the household. How do I mean? The TSA policy is well intended;
it is supposed to unify the structure of government’s account balances, of
government’s collections and government’s remittances. We know over time how multiplicities
of accounts were run. How donor funds were diverted and how some MDAs would
have surplus and others would be borrowing from banks to run their activities.
So, it is a very good intended policy. However, where I quarrel with its
implementation is when it is full blown hundred percent. And I will tell you,
why, sir.
Tell me

Lukeman Oyewole Lawal to Asabeafrika….’This government must relax TSA in 2017′

I will give
you a simple example. If you diagnose a patient in the hospital and the patient
is supposed to go for a surgery, he or she is in bad condition. International
best practices are that you will check the blood pressure to know whether that
patient is feat for that surgery. You will check the blood sugar; you will
check the PCV level. These are basic checks that will not let you lose that
patient on the theater table. As much as you love the patient and you are
trying to salvage his or her life, you won’t rush him or her into the theater.

Lukeman Oyewole Lawal to Asabeafrika….’Taking off TSA 100% from banks is like killing those banks’

Taking TSAs off the banks hundred percent, off the MDAs hundred percent is like
rushing a patient into the theater without checking the vitals. And that is why
the banking sector has suffered so many shocks, so much job losses. That is why
industrial and commercial activities have been drastically reduced. That is
some of the reasons why the GDP growth rate has contracted in the negative. We
have projected 2.6% for next year; I don’t see how it is going to happen. We
projected 3.6% for this year, it didn’t happen. We suffered negative GDP growth
rate across first, second and third quarters. By the time the fourth quarter
will come out again, you will see that it will be negative. And that is why as
good the intention of the TSA policy was at the time, it should have been done
in phases.

Lukeman Oyewole Lawal to Asabeafrika….’Any Government Policy that does not take the interest of the Household into consideration is a useless policy’

(Cuts in) What do you mean by
What was obtainable
before now was that all capital votes or funds were domiciled at the Central Bank of Nigeria. It was only the
overheads that were domiciled with the commercial banks, and also, what we call
dedicated revenues. Now, dedicated revenues are obtained with MDAs that renders
social services like higher institutions (Universities), like public hospitals
and other social service institutions. Now, when they render services, they
collect funds and they use the same funds to run their systems. It is a revolving
fund but it is usually captured in the budget. It is always captured in the
budget and they use it to run their system on a daily basis. You will recall
that one of the germane demands of ASU
at the last warning strike was that the government should exclude their
endowment funds from TSA. Because the
endowment funds are funds that are donated for certain projects by individuals,
by philanthropists or even alumnus.

Lukeman Oyewole Lawal….’Contractors are hungry, FRSC are threatening to start taking bribes because of TSA’

So, they are now saying ‘instead of rendering us totally impotent
financially, let us be running with our endowment funds’
because the bureaucracy
surrounding the release of funds is quite crazy. Before you get payment from
the inception, the turnaround time of payment from where the requisition is
raised to when the cheques are ready, takes forever. We are not ripe to
implement TSA hundred percent because
a lot of sectors have suffered. The contractors are suffering, the artisans are
suffering, the market women are suffering and the traders are suffering.  Those institutions are everywhere. In every
state, we have over 534 federal institutions; I mean Ministries, Departments and
Agencies. About 70% of them are revenue generating in nature and so, they all
have their dedicated revenue accounts. Their accounting officers write cheques
and when they collect funds, they pay for services, they pay for supplies, the
contractors get paid, the tillers get paid, the painters get paid, the
furniture supplier gets paid and all areas of service rendering. 

Lukeman Oyewole Lawal to Asabeafrika….’The day-to-day running of MDAs cannot survive with the bureaucratic culture of Federal Pay officers’

They are involved in the procurement system
employed at those levels. So, by the time you make it a central payment system,
by the time all the funds are hundred percent domiciled at the CBN, then,
everybody will go to Abuja to process
their payments, wait for federal pay officers to bring their cheques and they
just keep waiting forever. On a yearly basis, our debt services fees is still
in the region of 35% of our revenue to be earned. It is crazy, over 1.3
trillion on debt servicing.

Are you now saying President Buhari
was not properly advised before going for a hundred percent implementation of
the TSA policy or we could probably say Mr. President is a victim of bad

Lukeman Oyewole Lawal….’Our People need a culture of impact assessment before unleashing harsh policies on the masses

I will be
very honest with you; we are a people that have not embraced the culture of
impact assessment. It is pertinent across government echelons, that the moment
you are trying a new policy, a new program, a new project, it is usually good
to do a pre-impact assessment. Let’s say your pre-impact assessment gives you
positive feed backs, by the time you implement across the first and second
quarter and you can see the damages it is doing, it is responsible for you to
relax such a policy. About 5 banks combined have posted about 80% profit
reduction in the course of this year. I mean, 80%; and one of the bank MDs, I
don’t want to mention his name, said, about three or four weeks ago when he was
at a forum and somebody asked ‘why are
you not giving long term loan?
’ He said ‘You
have taken away the TSAs. If you have taken away the TSAs from us, we don’t
have such funds to give as long time loans’
. Any economy that does not
support access to credit is doomed to fail. Whatever fiscal policy frame work
and monetary policy frame work that we are formulating that will not increase
access to credit, that will not increase ease of doing business, that will not
reduce the unemployment rate; I am telling you, honestly, sir, that we are not
doing anything positive.

Lukman Oyewole Lawal to Asabeafrika….’TSA has taken food off our table’

What is the way out of this economic
Our proposal
to the present government is that having identified all the positives of the Treasury Single Account (TSA), it is a
good one. However, we must not be oblivious of the negative effects that have
taken jobs off 5.6 million Nigerians in the year 2016; apart from the foreign
exchange difficulties that we have had. Apart from the drop in the crude oil
price per barrel, apart from the restiveness in the Niger-Delta that have
reduced our production output, I am telling us with every sense of
responsibility today, that the full implementation of the Treasury Single Account
has impeded economic growth drastically this year (2016), it has taken food off
our tables, it has impoverished hundreds of millions of our people. We must
relax it. The dedicated revenues of these MDAs would be spent anyway. They
would still get the funds and they will spend them but the delay, the number of
months that they will be waiting to get these cheques; you can imagine the
number of people that would be hungry, imagine the number of jobs that would be
lost and just imagine the number of businesses that will be closing down every
day. The truth of the matter is that businesses keep on closing down. If we
relax TSA by 60% as we are entering 2017, you will all be shocked at the improvement
in economic activities that we would witness as we begin the New Year.
Are you sure?

Lukeman Oyewole Lawal with Gbenga Dan Asabe

If we relax TSA the economic
livelihood of our people will improve. What I mean is that, instead of
domiciling hundred percent at CBN, let us domicile 60% of funds that are
dedicated revenue at those agencies. Let UNILAG
(University of Lagos) spend 60% of what it is collecting. Let LUTH (Lagos State University Teaching
Hospital) spend 60% of what they are collecting as they were spending it. For
instance, recently, FRSC (Federal
Road Safety Commission) were threatening that they will begin to collect bribes
because salaries were not paid.
You mean the Federal Road Safety
Yes. In the
course of this same year (2016), some of the projections for TSA were that we
will borrow less. Have we borrowed less? No. our borrowings have increased. And
our deficit financing for next year (2017) is even increasing to about 2.7
trillion from about 2.2 trillion. So, we are inflicting ourselves with huge
problem by doing hard-line policies, by not doing periodic impact assessment,
by not relaxing policies that are injurious to members of the household. It is
a shame, that in this clime, we would open our eyes and watch businesses fold
up. The banks, they cried, they said ‘look,
by the time you take off these funds, we are going to have liquidity problems’
The Nigerian economy is largely public sector driven. We have reduced cash
reserve ratio three times, no impact because the huge of the funds were coming
from the public sector not the private sector. Even though cash reserve ratio
has been reduced to 25% or 20% we cannot see the positive impact. No businesses
are opening, no new businesses are opening. Businesses keep folding up.
Contractors are groaning every day. They are owed by all these MDAs, their
cheques are not coming in. So, any system that is taking jobs off people, that
is not contributing positively to the circular flow of income, between the
government, between the firms and the household, must be abated, must be
reversed, must be relaxed as a matter of urgency. Today, you are there, you owe
us, we cannot continue to have suicides every week. It is painful.
Let me get you clearer now, are you
saying TSA is a doom economic policy. I want you to be frank?
I will be
very honest with you, to the extent where the government knows how much it is
worth on a daily basis as retained earnings,
has given us the opportunity to know that ‘oh, we made N2.2 trillion
Naira today. Tomorrow after all payment, we have N2.1 trillion, next tomorrow
N3.2 trillion has come in, we have this amount. To the extent where agencies
that were diverting government funds, none of that is happening again, it is a
good policy. To the extent where agencies or accounting officers were trading
with government funds and now stopped, it is a good policy. To the point where
even banks themselves were not remitting government funds as at when due, and
that has equally stopped, it is a good policy. However, I will give you an

Lukeman Oyewole Lawal

I was at a conference on the 3rd of December 2015
organized by World Bank, International Federation of Accountants, Association of National Accountants of Nigeria, the Accountant
General’s office and the representative of the minister of finance was there.
The seminar was organized to talk about
‘Transparency and accountability in governance; the role of the Treasury Single
. There were four professors that gave paper presentations and two
others were discussants and the white guy from IFAC (International Federation of Accountants) another white woman
from World Bank and we all agreed,
that as much as there are positives and advantages, we must not be weary of the
disadvantages because it could stifle economic growth and that is what I have
seen in the course of 2016. GDP growth in the negative, across the first
quarter, across the second quarter, across the third quarter is largely caused
by the full implementation of the Treasury
Account. I say this with
every sense of responsibility in me because if you leave those MDAs with their
dedicated revenues to pay for services rendered, to pay for supplies, we will
be moving well in the economy. A lot of banks would have funds to give
contractors, contractors will take funds, render services, ninety days overdraft,
pay interest to the bank, pay their staff, everybody is happy. That is how to
run a good economy. We must relax TSA by
60% for all financial autonomy MDAs.  For
all Ministries, Departments and Agencies like universities, like tertiary
institutions and other social services rendering federal agencies. Let them
have 60% of their funds spent by them as they were spending them before. We can
improve financial control through periodic checks. We can improve financial
control through mystery check such that in the course of the year, if there are
agencies that are not complying with laid down regulations, we could sanction

What is a mystery check?

LOL to Asabeafrika….’There are many other ways to check the excesses of MDAs than stifling funds with TSA

The mystery
would come from the ministry of finance. They will send their
staff or their agent to see how the financial system of the MDA is being
operated and responding to lay down rules without their prior notice. That is a
mystery check, they will not be
informed that they are coming and nobody would be aware of the inspection. Or
they could just send in a consultant to ask questions; the person will tell
them ‘Oh, I am running a research, I have
letter of interest to ask questions on how you make your payments? How do you
nominate your contractors?’
By the time that person gathers the
information, he will be able to give some feed backs to say ‘Yes, this people are complying with laid
down control procedures or this people are not complying with laid down control
. Instead of having fiat announcement restricting growth,
restricting economic activities, promoting job losses, promoting negative GDP
growth rate and putting food off the table of millions of our people. For every
fund that comes from the government to the firms, automatically, the members of
the household would get salaries, would get payment. The pepper sellers will
get out of it, the meat sellers will get out of it, the landlords will get out
of it, and the transporters will get out of it, everybody because it is a
circular flow. But any policy that impedes the smooth running of the circular
flow of income must be done away with. Our payment cycle, our payment
turn-around time, the duration is too long. We don’t run automated payment
systems here. There is no system in place to pay 534 agencies in one fell
swoop. It is not possible.
(Watch for more facts
and solutions in our Exclusive Video of this explosive interview on Gbenga Dan
Asabe YouTube Channel coming soon. Go and subscribe and Watch as it debuts)


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