By Olawunmi Ashafa,
The Federal Government’s renewed efforts to curb financial crimes as well as plug leakages in the Federation Account saw it introducing and implementing the Treasury Single Account (TSA).
Similarly, it introduced on Sept. 15, the Biometric Verification Number (BVN) to check fraud emanating from the banks.
Ultimately, the TSA is a public accounting system under which all government revenue, receipts, income and payments are collected into one single account, maintained by the Central Bank of Nigeria (CBN).
The purpose is primarily to ensure accountability of government revenue, enhance transparency and avoid misapplication of public funds.
The maintenance of TSA, the government says will help to ensure proper cash management by eliminating idle funds usually left with different commercial banks and in a way enhance reconciliation of revenue collection and payment.
At individual and organisational level, the BVN is another important step by the CBN which links bank accounts with the physical features which are unique to individual’s fingerprints and the face.
The record will be used to identify the person afterwards. Once a person’s biometrics have been recorded and the BVN issued access to the customer’s account(s) is made easy.
The major objectives of this novelty are to protect customers, reduce fraud and strengthen the Nigerian banking system.
The major impact of the BVN is that it has to a large extent checked financial crimes, especially money laundering and reduced the number of loan defaulters.
It has also helped to identify people who opened more than one account in different names, birth dates and with fake certificates.
The TSA, on other hand, forced banks to release N740 billion to the CBN as a result of its implementation.
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The development no doubt, affected the banks’ deposits, raising concerns that it will adversely reduce liquidity in the system.
The News Agency of Nigeria (NAN) reports that for the effective implementation of the initiative the CBN issued a circular directing all commercial banks to implement the Remita e-collection platform to mark the beginning of the full implementation of TSA system in Nigeria.
The Remita e-collection is a technology platform deployed by the Federal Government to support the collection and remittance of all government revenue to a consolidated account domiciled with the CBN.
Financial analysts at the beginning of the implementation of the TSA said it would bring about transparency, efficiency and accountability.
The initiative actually made financial institutions to realise the need for them to explore other new sources of deposits and sustain market liquidity.
The Bankers’ Committee in September said the full compliance with the TSA did not slow down lending growth in the country nor drag down bank’s operations.
They also maintained that the banking industry remained strong in spite of the take off of the TSA.
The Managing Director, Fidelity Bank Plc, Mr Nnamdi Okonkwo, said the committee reviewed the impact of the TSA which became effective on Sept. 15.
Okonkwo said that the total value of the cash reserve requirements released by banks due TSA implementation stood at N740 billion.
The CBN Governor, Godwin Emefiele, during the year in review, said that money in the government’s TSA as at November was in excess of N2 trillion.
Also, on the implementation of the BVN, the nation’s foreign exchange reserves began a “gradual recovery’’ which the CBN attributed its management of dollar demand and the government’s effort to plug leakages.
The nation’s external reserves stood at 34.49 billion dollars as at Jan. 5, from the 34.47 billion dollars recorded in Dec. 31, 2014.
But shortages of the Dollar has forced Nigeria’s external reserves into a massive decline, hitting a new low of 29.746 billion as at December, while the Naira value deteriorated in the unofficial foreign exchange market.
NAN recalls that the CBN had spent about 5 billion dollars between January and July defending the Naira which was hit by last year’s plunge in oil prices.
The CBN said it was able to save 300 million dollars as at August from Bureau De Change (BDC) through the condition that request for forex must be accompanied by the customer’s BVN.
Emefiele said the BVN requirement for transactions had cut down the number of BDCs that request for forex, resulting in the cutting down of foreign exchange requests by 100 million dollars every week.
According to Emefiele, the weekly savings of 100 million dollars has resulted in foreign exchange savings of 300 million dollars in December.
He added that the policy had chased out fraudulent BDCs from the system.
A Europen rating agency, Fitch Ratings, during the year gave Nigerian banks clean bill of health in spite of the CBN’s tight monetary policy and new banking rules.
The organisation said its rating was supported by the nation’s continued robust economic growth.
Fitch also said that it expected the banks’ performances and growth to be moderate by next year due to CBN’s actions aimed at protecting the economy and the banking system.
The agency said that earnings pressure was exacerbated by high operating costs at most banks due to a higher Asset Management Corporation of Nigeria (AMCON) levy and network expansion strategies.
It also added that banks were now seeing some asset quality deterioration with rising absolute Non-Profit Loans (NPLs) that reflected fast loan growth since 2011.
Fitch said that most banks’ NPL ratios remained below the five per cent prescribed by the CBN but added that it could be unsustainable in the long-run.
The Managing Director, Afrinvest West Africa Plc, Mr Ike Chioke, believed the incorporation of a long term diversified strategy in fiscal policy was required to deliver the cushioning support for shocks in various segments of the economy.
For him, the persistent pressure on the Naira could have been minimised if a counter cyclical fiscal policy was developed as the CBN could not continue to defend the Naira with foreign reserves.
“To reduce this pressure, an inward looking policy on tax incentives, infrastructure development and production subsidy should be emphasised to reduce the dependence on imported goods,’’ he said.
Reacting to the development, Managing Director, Skye Bank Plc, Mr Timothy Oguntayo, said the current scenario was caused by a number of factors, including unproductive industries and over-dependence on oil revenue.
Oguntayo added that it would not be easy to halt the drift unless certain drastic actions were taken by the authorities.
He maintained that the flow of dollars from various sources appeared to be drying off because of the current global economic realities. (NANFEATURES)