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1.1       Background of the Study

Treasury Single Account is a public accounting system under which all government revenue, receipts and income are collected into one single account, usually maintained by the country’s Central Bank and all payments done through this account as well (Adeolu, 2015). The Central Bank of Nigeria (CBN) in February 2015 issued a circular directing all deposit money banks to implement the Remita e-collection platform. The Remita e-collection is a technology platform deployed by the Federal government to support the collection and remittance of all Government revenue to consolidated account domiciled with the CBN. This marked the beginning of the full implementation of Treasury Single Account (TSA) system in Nigeria (Chukwurah & Eme, 2015).

            Treasury Single Account is one of the financial policies implemented by the Federal Government of Nigeria to consolidate all inflows from all the ministries, departments and agencies (MDAs) in the country by way of deposit into Commercial Banks traceable into a single account at the Apex Bank in the country- Central Bank of Nigeria (Primetimes, 2015).

            Government banking arrangements are an important factor for efficient management and control of government’s cash resources. This requires ensuring that all cash received is available for carrying out government’s expenditure programs and making payments in a timely basis. Many emerging markets and low-income countries have fragmented systems for handling government receipts and payments. In these countries, the ministry of finance/treasury lacks a unified view and centralized control over government’s cash resources. As a result, this cash lies idle for extended periods in numerous bank accounts held by spending agencies while the government continues to borrow to execute its budget.

            A TSA is a unified structure of Government Bank accounts that gives a consolidated view of government cash resources. (Pattanayak & Fainboin , 2015). Based on the principle of unity of cash and the unity of treasury, a TSA is a bank account or a set of linked accounts through which the government transacts all its receipts and payments.

            The purpose is primarily to ensure accountability of government revenue, enhance transparency and avoid misapplication of public funds. The maintenance of a Treasury Single Account 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 (Adeolu, 2015).

            According to Section 80 (1) of the 1999 Constitution of Nigeria as amended “all revenues, or other moneys raised or received by the Federation (not being revenues or other moneys payable under this Constitution or any Act of the National Assembly into any other public fund of the Federation established for a specific purpose) shall be paid into and form one Consolidated Revenue Fund of the Federation”.   Successive  governments have continued to operate multiple accounts for the collection and spending of government revenue in flagrant disregard to the provision of the constitution which requires that all government revenues be remitted into a single account. It was not until 2012 that government ran a pilot scheme for a single account using 217 Ministries, Department and Agencies as a test case. The pilot scheme saved Nigeria about N500 billion in frivolous spending (Gabriel, 2015). The success of the pilot scheme motivated the government to fully implement TSA, leading to the directives to banks to implement the technology platform that will help accommodate the TSA scheme (CBN, 2015).

1.2       Statement of the Problem

            Treasury Single Account has caused cash crunch and liquidity challenges to the banking sector, who before the introduction of the TSA feed fat on the float created by the duplicated and unaccounted Ministries, Department and Agencies (MDA’s) accounts in all the commercial banks in Nigeria. The introduction of TSA has also led to increase in deposit interest rates as a major means of inducing customers to make more deposits while the lending rates as well as the profitability of the banks continue to diminish.

            Also, lack of effective financial control over its cash resources by Federal government brought financial deficiencies in multiple ways. This is why the study on the effect of Treasury Single Account on Nigerian Banks and economy is very necessary.

1.3       Objectives of the Study

            The main objective of this study is to examine the effect of treasury single account on Nigerian banks and economy. The specify objectives include to:

1.4       Research Questions

            The following research questions were stated to guide this study:

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