THE IMPACT OF TREASURY SINGLE ACCOUNT PROFITABILITY OF COMMERCIAL BANK IN NIGERIA, (CASE STUDY OF UBA PLC)

CHAPTER ONE
INTRODUCTION

Background Of The Study: The Treasury single account is a banking arrangement that was put into place in order to control several accounts that were formed by various ministries, departments, and organizations (MDAs). The primary goal of a TSA is to guarantee that an effective aggregate control is maintained over the cash balances held by the government. The consolidation of cash resources via an arrangement with TSA makes cash management more convenient for the government and reduces the expenses of borrowing money. Due to the lack of a TSA, inactive balances are kept in a number of different bank accounts. Before the TSA was implemented in Nigeria, MDAs that produce revenue would maintain several bank accounts at commercial institutions, they would utilize a portion of the revenue earned to support their operations, and then they would transfer any remaining revenue to the federal account. As a direct consequence of this, organizations deposit into the government account whatever they see appropriate. As a consequence of this circumstance, monies may be lost, embezzlement of public funds may occur, and a government may be unable to determine the precise amount of money that is currently in its account [1]. The growth of the economy was hampered as a result of all of these factors. In contrast to the clause of the Nigerian Constitution that mandates all government revenue collection to be remitted into a single account, this stands in stark contrast to the constitutional mandate. In accordance with the provisions of subsection (1) of section 80 of the Constitution of the Federal Republic of Nigeria, which was adopted in 1999, all of the government's revenue money must be remitted into a single account known as the Consolidated Revenue Fund (CRF). Without adhering to the rules of the constitution, the federal government has been running a disjointed banking arrangement, with thousands of bank accounts scattered among a number of different banks.

It has been hypothesized that the implementation of TSA would have a detrimental effect on the day-to-day operations of commercial banks in Nigeria. Clearing and consolidation of cash balances into the central account must occur every day for TSA to work in an efficient manner. The scope of TSA's authority extends to include all designated money and budgetary accounts, as well as monies held in trust by the government. It is envisaged that all Ministries, Departments, and Agencies would transfer whatever revenue they collect to this account by way of the various commercial banks that serve in the capacity of collecting agents. At the conclusion of each banking day, however, these banks would be required to transfer all of the monies that they have remitted to the Consolidated Revenue Accounts held by the CBN. Remita is the Central Payment Platform that supports the payments of the Federal Government and MDAs under the TSA because it is widely accepted and connected online to all of the DMBs as well as a sizeable number of Micro Finance Banks (MFBs) and Primary Mortgage Institutions. In addition, Remita is connected offline to all of the DMBs (PMIs). TSA enables complete and timely information on government cash resources; it improves appropriation control; it improves operational control during budget execution; it enables efficient cash management; it reduces bank fees and transaction costs; it facilitates efficient payment mechanisms; it improves bank reconciliation and quality of fiscal data; it reduces the need for liquidity reserve; and it improves bank reconciliation. The central bank of Nigeria is responsible for maintaining custody of the TSA. However, the balances in commercial banks should be cleared every single day, and all cash balances held by the government should be aggregated into one central account held by the treasury at the central bank. [2].

The problem with the TSA did not begin with the government of President Buhari in Nigeria. In point of fact, the previous President Goodluck Jonathan was the one who came up with the plan, but he was unable to put it into action before he left office on May 29, 2015 [3]. In September 2015, the Buhari administration issued an order mandating that all ministries, departments, and agencies (MDAs) transfer any account balances they held with deposit money banks to a centralized pool held by the Central Bank of Nigeria (CBN) [4]. In the year 2012, the federal government conducted a trial run of a single account pilot program, with 217 ministries, departments, and agencies serving as the test subjects. As a consequence of the pilot program, Nigeria was able to save unnecessary expenditures of over 500 billion. This research inspired the government to fully implement the Treasury Single Account (TSA), and also prompted the government to issue orders to deposit money banks (DMB) to build the technological infrastructure that would assist in accommodating the Treasury Singly Account Scheme. Because of this, the Treasury is able to decouple the management of cash control from the level of individual transactions [5, 6].

The Treasury single account is a pool in which all government revenue is collected and handled by the Central Bank of Nigeria. This was done with the intention of boosting the economy and reducing corruption [7]. These researchers carried out a work of the data. They gathered secondary data from CBN and examined it using the segmented simple linear regression method, which involves analyzing each of the factors in question independently. They may have benefited from using multiple linear regression as a model for their work. The total impacts of the factors on the overall performance of the dependent variable may be determined via the use of multiple linear regression, which will combine all of the parameters that are being considered into a single regression model (TSA). They examined the relationship between the Treasury Single Account and economic performance in Nigeria, and the findings of their work indicate that the Treasury Single Account has a substantial and economic influence on the growth of the Nigerian economy. The results of their research indicate that the TSA indicators can account for about 99.12% of the overall fluctuations in the Nigerian economy. The remaining 0.88% of variations that cannot be explained by the indicators may be attributed to additional variables that are not included in the model.

Treasury Single Account was implemented in Nigeria as a response to the various fraudulent practices that are present in the public accounting system of the country, as well as the country's lack of transparency and accountability [1]. The researcher took an all-encompassing look at the good impact that the introduction of TSA had on the economy and the public accounting system, as well as the negative impact that it had on the liquidity base and the performance of the banking sector in Nigeria. In order to acquire data for his study from the Management staff of the 10 banks that were chosen for the study, the researcher used primary sources of data collection in the form of questionnaires. During the process of data analysis, she used the Chi-square statistic as her test statistic. It was determined, on the basis of the collected findings, that the introduction of Treasury Single Account into the public accounting system had a detrimental effect, both on the liquidity base and the performance of the banking sector in Nigeria. However, primary data collected through questionnaires is insufficient for this type of study; rather, empirical data (collected from secondary sources) based on the performance of the banks should have been used to ascertain the actual performance of the banking sector after the TSA was implemented.

(6) was of the opinion that given that the federal government of Nigeria had introduced Treasury Single Account (TSA) in order to appropriately manage the limited financial resources at the federal level, the state governments of Nigeria ought to have followed suit and done the same thing. The goal of their research was to investigate the advantages, disadvantages, and potential future applications of the Treasury Single Account (TSA) among the various state governments in Nigeria. The researchers chose to acquire the necessary information for their study via the use of a survey design and a non-probability sampling technique known as purposive sampling. This technique is considered to be one of the primary ways of data collection. Purposive sampling, on the other hand, is insufficient for an investigation of this kind since it does not provide each individual in the community with an equal opportunity to be included in the sample. Rather of using questionnaires as a method for collecting data, an investigation of this kind has to rely on empirical and secondary data instead. However, the findings of the research showed that the adoption and complete implementation of TSA by state governments would be of tremendous value. This is despite the fact that there will be obstacles in the short term; however, the advantages in the long run will undoubtedly outweigh the challenges. The researchers came to the conclusion that in order to successfully control and account for public expenditures, each of Nigeria's state governments need embrace and completely implement TSA. Within the scope of this research, it was also found that the researcher incorrectly utilized the T-test statistic while testing for a huge sample that was even more than 100. The Z-test statistic would have been the ideal choice for this examination. We recommend that researchers conduct extensive literature reviews prior to beginning an analysis in order to avoid falling victim to deception. Additionally, we recommend that journals that publish such work make an effort to conduct thorough reviews of the works prior to accepting them for publication in order to protect both the reading public and the reputation of the journal.

1.2 Statement Of The Problem

Without a doubt, prior to the implementation of the Treasury Single Account (TSA), the custodian of public monies was the Deposit Money Banks (DBMs), which maintained several duplicated accounts. The adoption of TSA, on the other hand, brought in a number of significant developments, such as the Central Bank of Nigeria (CBN) being the only custodian of public funds and DMBs taking on the role of collecting agents throughout the country. It would seem that this is where the liquidity issue that the vast majority of DMBs have been struggling with over the last four (4) years originated. A bank that is struggling with high levels of liquidity may not be able to resist adverse shocks and may not be able to contribute to the stability of the financial system. This reveals that liquidity is essential to the profitability of financial institutions like banks. The complete implementation of the TSA, according to [9], will not have a negative impact on financial banks. It will only damage organizations that claim to be banks but have failed, refused, or been too negligent to grasp banking and carry out the functions that bankers carry out elsewhere.

Since the introduction of TSA, a great number of studies that provide disaggregated results on its influence on the liquidity and profitability of Deposit Money Banks (DBMs) in Nigeria have been conducted. These studies have been conducted since the introduction of TSA. Studies such as [1], [10], and [11] found that the TSA did not have a significant impact on the profitability of banks. However, studies such as [6], [8], [12], [13], [14], [15], and [16] reported that the TSA did have a substantial influence on the profitability of banks. These disaggregated results need more investigation into topics of this sort. In a similar vein, none of these other studies included four (4) measures of the profitability of banks, which is one of the things that sets this current study apart as a unique research endeavor. On the basis of these suppositions, the purpose of this research was to investigate the effect that the Treasury Single Account (TSA) has had on the profitability of commercial banks in Nigeria.

1.3 Objectives Of The Study

The overall aim of this study is to critically examine the impact of the Treasury Single Account (TSA) on the Profitability of commercial banks. Hence, the study will be channeled to the following specific objectives;

1. Examine the impact of Treasury Single Account (TSA) on earning per share of commercial banks.

2. Examine the impact of Treasury Single Account (TSA) on profit after Tax (PAT) of commercial banks.

3. Examine the impact of Treasury Single Account (TSA) on  return on equity (ROE) of commercial banks.

4. Examine the impact of Treasury Single Account (TSA) on  return on assets (ROE) of commercial banks.

1.4 Research Question

The study will be guided by the following questions;

1. What is the impact of Treasury Single Account (TSA) on earning per share of commercial banks?

2. What is the impact of Treasury Single Account (TSA) on profit after Tax (PAT) of commercial banks?

3. What is the impact of Treasury Single Account (TSA) on  return on equity (ROE) of commercial banks?

4. What is the impact of Treasury Single Account (TSA) on  return on assets (ROE) of commercial banks?

1.5 Research Hypotheses

The following hypotheses will be tested in the course of this study;

H01: Treasury Single Account (TSA) has no positive impact on earning per share of commercial banks.

H02: Treasury Single Account (TSA) has no positive impact on profit after Tax (PAT) of commercial banks.

H03: Treasury Single Account (TSA) has no positive impact on  return on equity (ROE) of commercial banks.

H04: Treasury Single Account (TSA) has no positive impact on  return on assets (ROE) of commercial banks.

1.6 Significance Of The Study

The study of the impact of treasury single account on the profitability of commercial banks in Nigeria will be of great benefit to the federal government of Nigeria, the commercial banks in Nigeria, the ministries, departments, and agencies in Nigeria, and of the utmost importance to the citizens of Nigeria because it will ensure that proper budget and fund allocation to all areas of the economy will be done in an appropriate manner. Additionally, it will be used as a literature review by researchers who come after them. This indicates that other students who may desire to conduct studies in this field will have the option to utilize this study as accessible material that can be submitted to critical assessment. This can be done since this study may be used as a resource. Inevitably, the findings of the research make a sizeable contribution to the existing body of academic knowledge regarding the influence of treasury single account on the profitability of commercial banks in Nigeria. This is the case whether or not the research was conducted using quantitative or qualitative methods.

1.7 Scope Of The Study

This study is structured to generally examine the impact of treasury single account on the profitability of commercial banks in Nigeria. The study will be carried out in UBA Plc. And will further the period of 7years(2012-2017).

1.8 Limitation Of The Study

The major limitation of the study is that of data insufficiency which makes it impossible for the study to adopt a uniform time frame for all the channels. And financial inadequacy was the major limitation for this work. The researcher was financially independent as a student the need for material trips and logistics needed for this research was not adequately provided.

1.9 Definition Of Terms

TSA: This  refers to Treasury Single Account, is a financial policy or unified structure of government banking introduced by the federal government of Nigeria in 2012 to consolidate all inflow 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.

Financial Leakages: This refers to improper outflow of public fund from a circular flow of income model.

Transparency: a positive and clear view of financial statement of Nigeria.