1.1 Introduction
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The Treasury Single Account (TSA) is a unified structure of government bank accounts that enables the consolidation of all government revenues and payments into a single account maintained by the Central Bank of Nigeria (CBN) (Onoh, 2015). The primary objective of the TSA is to enhance transparency, reduce financial leakages, and improve the efficiency of public fund management. By centralizing government funds, the TSA ensures that idle funds in multiple accounts across various ministries, departments, and agencies are eliminated, thereby increasing liquidity in the banking system and optimizing fiscal discipline (Obadan, 2012).
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In Nigeria, the adoption of the TSA emerged as a critical reform in public financial management aimed at addressing longstanding issues associated with fragmented treasury operations. Prior to its implementation, the government maintained several accounts in commercial banks, which often led to difficulties in tracking revenue collection, mismanagement of funds, and challenges in financing development projects (Ezeoha, 2014). The inefficiency of this system hindered economic growth, limited fiscal space, and created opportunities for corruption and embezzlement of public funds.
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As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitation of the study and Definition of terms.
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1.2 Background of Study
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In Nigeria, the history of TSA implementation can be traced back to early attempts at financial consolidation during periods of fiscal reforms in the late 20th century. Onoh (2015) reported that prior to the formal introduction of the TSA in 2012, Nigerian government agencies operated multiple accounts in various commercial banks, a practice that resulted in inefficiencies, revenue leakages, and difficulty in monitoring government cash flows. This fragmented banking system often hindered the effective utilization of public resources and constrained economic development.
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The formal adoption of the TSA by the Nigerian government was initiated in 2012 under the administration of President Goodluck Jonathan, with the Central Bank of Nigeria designated as the primary banker for all government revenues (Ezeoha, 2014). The reform was designed to enhance transparency, reduce financial mismanagement, and improve fiscal discipline across federal, state, and local governments. According to Aregbeyen and Adegbite (2016), the TSA has since evolved to become a central instrument in Nigeria's public finance management framework, providing real-time visibility of government cash flows and strengthening accountability mechanisms. On the other hand, despite its potential benefits, the implementation of the Treasury Single Account (TSA) faced resistance from some government agencies and encountered challenges related to technology, integration of state and local government accounts, and public awareness (Okoro, 2017).
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The management of public funds has remained a critical challenge for many developing economies, including Nigeria. According to Obadan (2012), the inefficiency in government cash management often results from the maintenance of multiple treasury accounts across various ministries, departments, and agencies, which makes monitoring, tracking, and effective utilization of funds difficult. The fragmented banking system reported that government resources are often idle in commercial banks, thereby limiting their availability for investment in productive sectors of the economy (Onoh, 2015).
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The Treasury Single Account (TSA) was introduced as a reform measure to address these longstanding challenges in public financial management. Ezeoha (2014) asserted that the TSA is designed to consolidate all government revenues into a single account held at the Central Bank of Nigeria, thereby minimizing leakages, promoting transparency, and ensuring that public funds are effectively deployed for developmental purposes. Furthermore, Aregbeyen and Adegbite (2016) stated that the TSA improves fiscal discipline by providing real-time visibility of government cash flows, enhancing accountability, and fostering prudent financial management practices.
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Several studies have also contended that the adoption of the TSA has broader economic implications, including increased liquidity in the banking system, improved monetary policy implementation, and strengthened investor confidence in government fiscal operations (Okoro, 2017). On the other hand, challenges such as resistance from certain government agencies, technological limitations, and incomplete integration of all tiers of government into the TSA framework have been reported to hinder its optimal performance (Ezeoha, 2014). This study is set against the backdrop of understanding the effectiveness of the TSA in promoting fiscal discipline, enhancing transparency, and stimulating economic growth in Nigeria.
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1.3 Statement of Problems
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Investigation revealed that the Nigerian government has historically faced significant challenges in managing public finances, primarily due to fragmented banking practices and multiple treasury accounts across various government agencies (Obadan, 2012). The inefficiency in cash management undermines the government’s ability to execute developmental projects promptly and affects overall economic stability. Moreover, the existence of multiple accounts leads to idle funds in commercial banks, which limits the availability of credit for private sector investment, thereby constraining economic growth (Onoh, 2015).
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Furthermore, the introduction of the Treasury Single Account (TSA) system is intended to consolidate all government revenues into a single account maintained by the Central Bank of Nigeria. Critics argue that improper implementation, resistance from some government agencies, and challenges in integrating all levels of government into the TSA framework limit its effectiveness (Ezeoha, 2014). It is against this backdrop that this study seeks to examine the effect of the Treasury Single Account on the economy of Nigeria, evaluating its role in promoting fiscal discipline, enhancing transparency, and stimulating economic growth.
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1.4 Aim and Objectives of Study
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The aim of this study is to assess the effect of the Treasury Single Account on Nigeria’s economic development. The specific objectives of the study are as follows:
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\r\n- To examine the role of TSA in consolidating government revenues and reducing idle funds in commercial banks.
\r\n- To evaluate the impact of TSA on transparency and accountability in the public sector.
\r\n- To assess the effect of TSA on government expenditure efficiency and fiscal discipline.
\r\n- To determine the challenges and limitations associated with TSA implementation in Nigeria.
\r\n- To examine the overall influence of TSA on economic growth and development.
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1.5 Research Questions
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Based on the objectives of the study, the following research questions have been formulated:
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\r\n- How does the TSA contribute to the consolidation of government revenues and reduction of idle funds?
\r\n- What is the impact of the TSA on transparency and accountability in public financial management?
\r\n- In what ways does the TSA influence government expenditure efficiency and fiscal discipline?
\r\n- What are the main challenges and limitations associated with the implementation of TSA in Nigeria?
\r\n- How does the TSA affect overall economic growth and development in Nigeria?
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1.6 Research Hypothesis
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In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
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Hypothesis One
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\r\n- H0: The implementation of the Treasury Single Account has no significant effect on economic growth and development in Nigeria.
\r\n- H1: The implementation of the Treasury Single Account has a significant effect on economic growth and development in Nigeria.
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Hypothesis Two
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\r\n- H0: The TSA negatively enhances transparency and accountability in public financial management.
\r\n- H1: The TSA positively enhances transparency and accountability in public financial management.
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1.7 Significance of Study
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It is believed that at the completion of the study, this research will assist policymakers in identifying strengths and weaknesses in TSA implementation. It will also guide government agencies on how to optimize cash management, improve accountability, and ensure efficient use of public funds.
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Furthermore, financial institutions will understand how TSA will impact liquidity and cash flow in the banking system. In addition, the study will enrich academic literature on public finance reforms and inform investors and the public about the economic implications of centralized revenue management.
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Lastly, academics and researchers will have empirical data on TSA’s effects on economic development. Also, the general public will appreciate how TSA will improve transparency and confidence in government financial management.
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1.8 Scope and Limitations of the Study
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This study focuses on the effect of the Treasury Single Account on the economy of Nigeria, using the Federal Government Ministries, Departments, and Agencies (MDAs) in Lagos State as a case study.
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The research will cover TSA implementation, challenges, and its impact on revenue management, fiscal discipline, and economic growth between 2012 and 2025.
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The study was limited by difficulties in obtaining comprehensive financial records from some government agencies, which affected the analysis of TSA performance.
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1.9 Definition of Terms
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Treasury Single Account (TSA):
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A unified structure of government bank accounts that consolidates all inflows from ministries, departments, and agencies into a single account at the Central Bank of Nigeria, aimed at enhancing transparency and fiscal efficiency (Onoh, 2015).
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Fiscal Discipline:
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The practice of government maintaining responsible spending and revenue collection practices to ensure sustainable economic growth and stability (Obadan, 2012).
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Public Financial Management:
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The process by which government manages its revenue, expenditure, and debt to achieve economic policy objectives and service delivery (Ezeoha, 2014).
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Revenue Leakages:
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Instances where government funds are lost or misappropriated due to inefficiencies, corruption, or weak monitoring systems (Aregbeyen & Adegbite, 2016).
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Economic Growth:
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The increase in a country’s production of goods and services over a period, often measured by Gross Domestic Product (GDP), influenced by effective resource allocation and financial management (Okoro, 2017).
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