The Federal Government has approved a new Treasury Single Account (TSA) tariff model which mandates that the service charge on payment to its ministries, departments and agencies (MDAs) from November 1, 2018 would be borne by the payer.
This was disclosed at the recently concluded One-Day Stakeholder Sensitisation Exercise on TSA e-Collection Charges held in Abuja on Tuesday October 30, 2018 which was organised by the Office of the Accountant General of the Federation (OAGF).
According to the AGF Ahmed Idris, “all funds collection into the TSA would require payers to bear the transaction cost.”
The new model would replace the previous one, wherein the federal government was responsible for paying the charges on all transactions to the service providers on behalf of payers.
In the previous tariff regime, the Federal Government often owed the technology service providers such as Systemspecs and the participating deposit money banks up to 24 months in service charges.
Dolapo Ashiru, a Lagos-based analyst while responding to the latest development said government cannot keep on subsidising everything.
“Although it will be a burden on the payers but the government does have a point in spreading the cost and not wanting to pay it anymore,” Ashiru said.
In 2012, the pilot TSA scheme commenced using a unified structure of accounting for the 217 MDAs for accountability and transparency in public fund management.
In August 2015, the initiative was fully implemented and covered over 1000 MDAs after a presidential directive.
READ ALSO: Deepening Nigeria’s Digital Economy Through FINTECH
At commencement, all players, including all commercial banks, SystemSpecs and the Central Bank of Nigeria (CBN), agreed that a fee of one percent of funds collected is payable. It is not yet clear if this the fee that will now be borne by individuals and businesses doing transactions with the government.
Ayo Akinwunmi, Head of research at FSDH Merchant bank believes the new tariff could help the government to increase its revenue as it takes out a major cost of operating the TSA.
“I think it is a way to lower cost on the part of the government and by achieving that the government decided to spread the cost to Nigerians. Most especially at a point when they are running low on revenue,” Akinwunmi said by phone.
The TSA has enabled the government to keep track of all its revenues across its MDAs. So far it is estimated that N8.9 trillion has gone through the TSA powered by SystemSpecs Remita platform. One percent of this transaction amount is N89 billion which will not be borne by payers into the federation accounts for any services required from the government.
Since the government forcefully enforced TSA in 2015, it has had trouble paying its technology partners and the CBN recently signaled it wanted to increase competition and reduce transaction costs for the TSA.
The CBN in a circular dated April 26, 2018 had announced that all licensed Payment Solution Service Providers (PSSP) would be eligible to participate in the sweeping of Federal Government collections to the CBN under the TSA e-collection framework via Nigeria Inter-Bank Settlement System (NIBSS) without direct integration with the CBN.
This circular effectively broke the monopoly that Remita, a product created by Systemspecs has had on the federal government TSA operations in the country and replaces it with a NIBSS monopoly.
“Accordingly, we advise all PSSPs to work on their various front end solutions to ensure that they conform to the new standard and also establish connectivity with NIBSS before the go-live date,” the circular signed by Dipo Fatokun, director, banking and payments system department read.
The implication is that PSSP and other players who have been left out of the massive TSA payments, which total about N8.9 trillion a year, can now favourably compete. Banks could also bypass PSSP and make payments to the CBN directly through NIBSS.
“There are no problems with Remita, just allowing room for more players and engendering competition,” Fatokun had said.
BusinessDay gathered that the go-live date was supposed to be at the end of second quarter or early third quarter. But there is no indication that this has been implement. Sources say it is likely that the introduction of the new TSA tariff model could have been the reason for the delay.
With the introduction of TSA, Remita was integrated into CBN, OAGF, and the banks such that payments made to the FGN and its MDAs reflect in their CBN accounts instantly. Remita also helps the government to make payments of salary, vendors, and other local payments directly from a single platform.
“Introducing other PSSPs will not degrade payment. It will give government options and drive down costs,” Johnson Chukwu, MD/CEO, Cowry Asset Management limited said.
Sources at Systemspecs, which created Remita and is reportedly owed billions since making the system available to the government, said then they were not worried about the new development as they have always put the national interest first.
ENDURANCE OKAFOR
