Evidence that TSA has hurt instead of helping Nigerians

Roughly 1,500 Nigerians in the financial services sectors have in the past couple of weeks been relieved of their jobs. This comprise of 200 from Skye Bank, 200 from Diamond Bank and 1,040 from Ecobank, just to mention a few.

Without the threat to withdraw banking licenses of institutions that would further sack employees by minister of employment and productivity – an intervention Nigeria Employers Consultative Council , NECA aver is illegal-more bankers heads would have rolled as First bank which suffered 82% profit loss in the last financial year, had plans to lay off much more than 1000 employees.

Since banks are the custodians of the funds that make the economy go round, when financial institutions are wobbling,the whole economy goes lame as evidenced by the trickle down effects such as factory closures and associated workers lay offs that are now the increasingly overbearing scenarios in Nigeria.

What’s the catalyst for the upsurge in the mass sacking of staff in the banking sector in the manner that they scramble with each other for customers juicy money deposits?

It’s simply, in part due to the introduction of the Treasury Single Account,TSA by the current regime.

To me, First bank’s unprecedented massive profit loss in 2015 financial year is proportional to the size of govt’s funds in its treasury that has been returned to the CBN vaults through TSA.

This is without prejudice to First bank’s credit impairment which spiked from about N26b in 2014 to nearly N120b in 2015,and also partly accountable for the drop in profit.

As a close scrutiny has revealed,the less the amount of govt funds in a bank, the less staff they are likely to lay off as reflected in the case of Skye and Diamond banks which are third tier and laid only off 200 staff apiece.

Compare that to Ecobank which is higher on the echelon, and it sacked over 1000 just as First bank which is next only to the CBN in the hierarchy of financial institutions holding public funds, could have laid off much more staff than 1000 if govt had not directed a stay of action on staff rationalization.

In the light of the foregoing, there  is credible intelligence that if funds now held in TSA domiciled in CBN are not urgently returned to the deposit money banks, DMBs, where they are traditionally meant to be,via payments to contractors , the threat to seize banking licenses by govt or NLC/TUC picket warning alone , can not deter the sacking of at least 10,000 bankers before end of 2016.

The Central Bank of Nigeria,CBN itself in a recent report has admitted that bank deposits dropped by about one trillion naira in the period between April 2015 and 2016.

That obviously confirms reduction in banking activities which would also compel  staff redundancy that underscores the need to downsize.

Sometimes, a purge becomes a compelling line of action to be taken by an organization for survivability. This ranges from reasons of inability to sustain existing overhead costs due to paucity of financial resources or to correct image/structure concerns.

Take for instance the sacking of 40 senior officers by the Nigerian army which the military considered inevitable.

While the banks embarked on their right sizing exercise based on financial squeeze which is the former, the army purged itself of ‘politically tainted’ personnel, which is the latter.

The rhetorical question arising from the two scenarios depicted above would be, did the minister of employment or NLC/TUC query or threaten picketing the army for doing what it needed to do due to exigency as they did to banks?

At this juncture,further background information on what spurred the TSA initiative, deemed to have triggered the mass sacking and labour crisis in the financial services sector, and which underscores the fact that, at the moment, TSA is hurting more than it is helping Nigerians and the economy, is in order.

Before the Ascension to power of the present govt, Ministries, Departments and Agencies, MDAs in Nigeria cumulatively operated 17,000 bank accounts.

Obviously, it’s govt’s funds, in excess of three trillion naira that were lodged in those accounts, but now tracked and mopped up into a single account in the CBN that has been buffeting the 21 banks in Nigeria.

With the advent of TSA, banks no longer have cheap funds in their vaults to lend to entrepreneurs and in the process also create employment for Nigerians who are trained to facilitate banking services.

Keep in mind that the nation’s  economy is practically driven by govt business, that’s why each time there is delay in the passage of annual appropriation bill by the National Assembly, NASS, the economy literally grinds to a halt.

Prior to the advent of the TSA, banks were very liquid because MDAs kept the funds required for daily operational activities like purchasing of office supplies that facilitate the functioning of govt business like files, fuel,electricity, telephone as well as water services etc in the banks.

In the private sector, such funds in sundry bank accounts would be deemed to be working capital.

While govt had all that fund, it was not in bulk because they were held in 17,000 different accounts spread across Nigerian and overseas banks-JP Morgan etc.

With such dispersal of govt funds across local and international financial institutions , it was difficult to keep track and protect the funds from being abused from a central position as is now the case through TSA.

One typical way that govt funds were mismanaged by MDAs was by lodging the money in banks for little or no interest payment to govt, while govt borrows- its own money- as it were from banks at exorbitant interest rates.

Such impropriety was so rife that often times, salaries and pension allowances of workers were lodged by crooked public officers into banks to earn under-the-table interest income for themselves, and to the detriment of workers whose salaries may be delayed by weeks and maybe months while yields from the pervert transactions are awaited to line the private bank accounts of the fraudulent public and civil servants.

In summary, the proliferation of bank accounts operated by MDAs was a veritable platform for corruption by public officials in Nigeria until TSA was introduced to plug the loopholes.

As the old saying goes, for every action, there is a reaction.

With 100% compliance, the effect of the implementation of TSA on the economy, was like draining a human being of blood because deposited funds in banks are their life lines and comparable to the role of blood in humans.

No matter how resilient and vibrant the financial services sector maybe, the withdrawal of a whooping three trillion naira from an economy with a mere GDP size of $530b could not have resulted in less shock and associated collateral damages hence banks are currently stretched to their brims and maybe in distress if quick remedial actions are not taken by the authorities sooner than later.

That’s also why, Nigerian economy that was expanding at a galloping speed of 7% barely 24 months ago, is now contracting at a rate that Nigeria had not recorded in over 24 years.

We all are now familiar with the nation’s misery index mirroring the deplorable  standard of living in Nigeria, so it bears no repetition, but could the nation have avoided the ensuing socioeconomic paralysis? The answer is a resounding yes, if the TSA policy was calibrated.

It is worth recalling that TSA is not the brain child of the current govt but it was originated by the previous administration which failed to implement it.

Goodluck Jonathan regime’s decision not to implement the TSA policy, was to avoid the dire consequences now being suffered by Nigerians.

At the point of attempting to introduce the policy, social impact assessment was conducted and it was discovered that it could create shock waves that would unhinge the economy and result in distress in the banks that would lead to mass sacking of staff which could cascade down the line to closure of businesses as currently being witnessed.

To avoid such calamitous consequences, it was agreed that TSA would be implemented in phases.Which means that it was decided that a stage by stage mopping up of funds off bank vaults in small doses would be more tolerable ,than one fell swoop, which is the method adopted by this govt and the economy ended up in a bind.

Ostensibly, for  failing to achieve the desired transformation in the fortune of Nigerians, Jonathan’s regime was punished by being voted out of office on March 28th 2015.

Similar to TSA was the now infamous Steve Oronsanye Committee which was set up to rationalize the over sized public service through reduction of MDAs by the outgone regime.

The  implementation of its recommendations was also stalled owing to the fear of undesirable fallout outs like jobs losses which could have created social upheaval and which Goodluck Jonathan’s govt could not bear.

Co-incidentally , the outgone govt and the new one had the shared vision of implementing TSA and downsizing of MDAs , but one demurred by not taking action , while the other took the bull by the horns and damned the consequences.

This is the reason that contrary to the care, caution and restraint applied by the previous govt, the current regime in the bid to bring the change that was promised Nigerians during campaign, appear to have thrown caution to the wind and delved straight into implementing TSA and rationalization of MDAs.

Typical of politicians, the national auditor of APC ,George Moghalu has railed at banks for laying off workers and dubbed it a ploy to sabotage the new ruling party and president Buhari’s govt.

He is wrong.

Rather, the downsizing of staff  in banks is a direct consequence of TSA policy and which the new govt rushed its implementation.

For obvious reasons banks and bankers can’t defend themselves for fear of losing their licenses and such trepidation is justified in view of the stern nature and low appetite for dissent by the govt currently in power.

Interestingly, the NLC/TUC-comprising of senior civil servants who were involved in the policy formulation-that should have prevailed on govt not to implement the policies due to obvious unpalatable consequences -failed to do so then,and are now threatening to picket banks for disengaging redundant staff when they should have encouraged govt to only implement the TSA policy in phases.

Make no mistake about it, l’m not by any stretch of imagination condemning the introduction of TSA and reduction of MDA’s policies  of this govt.

They are like malignant tumors that needed to be surgically removed but there was no surgeon bold enough to take on the job because the tumor was located too close to the heart of the patient, requiring methodical surgery until Buhari’s govt took the bull by the horns.

As there are two sides to a coin,there  are pros and cons to the introduction of TSA and reduction in MDAs. However, only the pros have been highlighted so far which has compelled me to bring to the front burner, in this article,the cons with a view to getting the authorities to address the inherent short comings of TSA policy.

Of course benefits derivable from the TSA initiative such as reining in corruption in the public sector and having a poll of funds to augment the current budget as opposed to borrowing from banks to conduct govt activities at exorbitant rates and sundry benefits are the most common.

However, the less obvious flip side, is that as a result of TSA, in the past one year,N3t has been sterilized in CBN vault which is contrary to and a negation of the principle of the function of money which is supposed to move from areas of surplus to areas of need to facilitate commerce and industry and in the process keep the wheels of production turning.

This is analogous to the parable  of three talents-funds- given to three servants by their master who was embarking on a long trip as told in the holy bible.The one who buried the talents that his master gave him for safe keeping while he was away, was condemned and the ones who traded with their talents and earned more talents which they presented to their master upon his return, received encomiums and gratuitous rewards.

The lesson in the foregoing analogy is that money should always be put to work as opposed to the current case of literarily burying the money in the past one year, through TSA.

Arising from the above,it is the combination of failure to harness the value of TSA funds trapped in CBN and the tumbling of crude oil price that are now manifesting as distress in the economy and debilitating hunger and starvation in the land.

Although at a grievous cost, the demon that the previous govt failed to confront, the present govt has taken on frontally and it is now wrestling with the ghosts-corruption- which if dexterously prosecuted would be buried,hopefully sooner than later.

In an article titled ” 100 Days Of Buhari: Political Paralysis or Policy Crisis ” published on Sept 23rd in Businessday newspaper and several online platforms, l alerted the authorities about the probable negative consequences of policies that do not pass through the crucible of critical thinking.

Perhaps owing to misalignment arising from tunnel vision of embarking on the short term mission of fighting corruption  as opposed to taking a long term view of quickly restoring confidence in the battery economy , the TSA addressed the immediate challenge of corruption, but in the process created the problem of economic paralysis.

In defense of president Buhari, the national leader of APC, Bola Tinubu before the celebration of 100 days in office of this administration, had admonished  critics in an article published in The Nation newspaper by asking a rhetoric question “May 29 was when this president was sworn in. It is a norm: there is a honey moon period, at least a minimum of 100 days honeymoon.And you won’t allow honey moon at all”?

The APC leader had a good point then,but one year after assumption of power , the 100 days honey moon period that Tinubu has elapsed, so it’s time to deliver to long suffering Nigerians, democracy dividends.

Without much ado, l would like to urge the authorities to jettison uncertainties in the economy emanating from inconsistencies in policies and programs which have incredibly assumed the dimension of being deemed as the policy thrust of this administration. It should replace uncertainties with the attitude that indicates that critical thinking is invested in policies and programs that this administration is governing us with.

Having achieved the objective of channeling all govt revenues into the CBN where officials can have clear view of all govt financial resources,as promised,authorities should immediately re-inject into the economy, the bulk of the TSA funds it scrubbed from banks to stimulate growth and get Nigerians working again.

Perhaps,mr president’s economic team , especially finance minister,Kemi Adeosun who is an economic stimulus enthusiast,should read Eric Rauchway’s book ‘The Money Makers:How Roosevelt and Keynes Ended the Depression, Defeated Fascism and Secured a Prosperous Peace’.

The author’s insight would be invaluable in their struggle to return Nigerian to the path of prosperity.

As Andy Stanley, Atlanta Georgia, USA preacher who was invited to preach during U.S president Barack Obama’s inauguration church service noted some four years ago, ” Leaders who don’t listen will be surrounded by people who have nothing to say”.

I personally don’t believe that is the case with the present leadership, but without concerted efforts to prove skeptics wrong,onlookers may jump to such an absurd conclusion,which would be unfortunate.

While this article was awaiting publication, having been wrapped up since last weekend, the good news that our president has been doing more than attending to his ear challenges and observing a deserved rest in London, crept in by way of his new assertive positive postulations in the media.

President Buhari’s article titled the ‘The Three Changes Nigeria Needs’ published in the prestigious Wall Street Journal, WSJ and culled by Thisday newspaper on the back page of the 14th June, 2016 edition is a highly significant and welcome gesture indicative of his shifting away from ‘body language’ to clear cut policy articulation.

Tellingly,our president adopted the  WSJ platform, whose main audience are global leaders of industry and commerce, for the epochal initiative of throwing light on the policies and programs of his administration.

This suggests that president Buhari now,more than ever, acknowledges the criticality of the international business community to Nigeria’s survival and the need to convince them to buy into the Nigerian project.

It gladdens my heart that the end to our nation’s  journey in economic wilderness, may be in sight.

Onyibe, a development strategist and futurologist was a former commissioner in Delta state and an alumnus of Fletcher school of Law and Diplomacy,Tufts university, Massachusetts, USA.