10 Aug

Daily Watch – Government monies centralised, Allocations jump 32%

  • All Federal Government Ministries, Department and Agencies have been mandated to run a single account, the Treasury Single Account (TSA) for all revenues, incomes and other receipts. The directive was issued by President Buhari in an attempt to promote transparency and clamp down on corruption. Under the new system, all receipts due to the government or any of its agencies must be paid into accounts maintained by the central bank unless specific permission has been granted not to do so. The new system would end the use of “several fragmented accounts for government revenues”, which he said had led to “the loss or leakages of legitimate income meant for the federation account”. The TSA is a unified structure of government bank accounts enabling consolidation and utilization of government cash resources. It can be a singular bank account or a set of linked accounts through which the government transacts all its receipts and payments and gets a consolidated view of its cash position at any given time.
  • A surprise 32 percent jump in Federal Account Allocation Committee (FAAC) disbursements, in a falling oil price environment has left analysts bemused. According to reports, the surge in the FAAC disbursements to the three tiers of government in June was a result a more transparent reporting of the federation’s gross revenues. The transparent reporting method imposed by the two-month old Buhari administration meant that revenues that were hitherto unaccounted for had to be brought into the collective pool for sharing. According to Adams Oshiomhole, the governor of Edo state, “we are already seeing the benefits of the attitude of the Buhari administration to our collective resources… we all can now see that the days of impunity are gone.” In its August 5 daily note, FBN Capital had said, “we struggle to explain the marked increase in the allocation which is predominantly derived from the oil industry.”
  • The economic slowdown in China, and the potential rate hike by the US federal Reserve is elevating the risk to Nigeria’s economy. An interest rate hike in developed economies will trigger capital flow reversals from emerging economies such as, while a slowdown in economic activities in China will impact negatively on the external balance of economies such as Nigeria. Easy credit from the US Fed and robust Chinese growth in the past decade had combined to drive investment dollars into emerging markets like Nigeria, bulking up currencies and driving commodity prices higher.