Financial experts instruct FG and NASS on reforms and efficiency of budgeting process


On Wednesday, financial experts from the Chartered Institute of Treasury Management (CITM) instructed the federal government to embark on financial reforms ahead of the presentation of the draft 2023 budget to the National Assembly.

CITM Registrar/Director General Mr. Olumide Adedoyin said on Wednesday that there were no proper safeguards in place to ensure the effective implementation of the Treasury Single Account (TSA).

Adedoyin, who addressed reporters in Abuja, also called for the continuous training and retraining of personnel responsible for critical sectors of the country’s economy to eliminate the waste of scarce resources.

To this end, he instructed policy makers and the National Assembly to enact procurement laws and domesticate them accordingly.

He said: “Like all government policy, the TSA as a function of a single account. It’s not an app, it’s not a policy, it’s just an account. What the TSA is trying to do is make sure the government has its resources in place and is able to know what it has at all times.

“Now the first step the government was supposed to take was to do what we call cash-out. Bring your resources from all the banks into one account. Once you do that, those bank accounts you have should not be closed, but rather try to moderate them in receiving banks.

“They receive on your behalf but you can’t disburse from those banks, whereas at the end of the day you just have a real-time online balance to make sure what comes in gets accounted for.

“It was supposed to be the function. But what we found in the end is that there are some small processes and challenges within this platform because the auditing back-end was not secure enough. So if you haven’t secured the background, even if you are able to craft resources and bring those resources, there is a small opening in the back that could cause the resources to bleed out, etc

“I think as it stands, we’ve actually reached out to the government on different forums, trying to get across to them that it’s very important to get these back-ends under control. Secondly, we also want to believe that there must be an orientation towards the continuous training and retraining of individuals. You’d be surprised if some who struggle with these responsibilities don’t actually understand the process effectively.

“The problem as it is is that there are no safeguards in place. We’ve talked about preventative mechanisms. That as it’s missing. We’ve talked about allowing cash management to have an impact on your cash management processes.That too is lacking.So those are the fundamental areas we are concerned about.So once you are able to ascertain, for example, if X amount is budgeted for a project, how do you approach this project, for example, you want to build roads, bridges, culverts, now you cannot release the funds for the completion of this road all at once, because there is a design process, a construction process for culverts, bridges, your revetments and everything else.


“What you need to do first and foremost is be able to design these projects with timelines. Once you’ve designed with timelines, release the funds that are responsible for it. Once those funds are released, make sure that are linked to individual aspects of these contracts.

“While we do that, whatever excess you have, invest those funds in very short-term investment processes that would make the process easier, even if it’s just commercial paper or government bonds. ‘State for this period so that the value of the money would not be lost.

“Once you do that effectively, it would be hard for anyone to come back and start looking for variation in those jobs. those things you can set up as one. Second, if you need to make things work, you have to be radical about it. radical in the sense that the laws governing public procurement and the like need to be further domesticated. What do I mean? You ensure that the equipment and items purchased each year that are desired can have a much longer lifespan.

“For example, in the office, you continue to buy photocopiers every year. Of course, you find that the copier can even last you five to 10 years when properly maintained.

“So those sums on those recurring things that can be used beyond the duration of those life shares could be reinvested in the system. What happened to these amounts? They are stolen and diverted.

While discussing the inefficiency of the budget process, NITM Technical Advisor, Mr. Daniel Akeju, highlighted the importance of the Medium Term Expenditure Framework (MTEF) and Fiscal Policy Paper (FPP) in achieving a effective implementation of the country’s budget.

“You mention the question of the budget. When the country introduced the Medium Term Sector Strategy (MTSS) in the budgeting system, we were happy because we believe that if it is followed as it is supposed to be, we will not miss or waste resources. I was part of the team that developed the three-year MTSS budget for Bauchi State a few years ago.

“The principle followed helps the State to eliminate waste. What have we done? we examined by department, by ministry what they needed. it’s not based on what was done last year, or what was done two years ago.

“But what is really necessary. these needs must be assessed and given figures. you have to give which one is more important, which one do we need right now, which one we can leave until the new future. you assess them and assign them to three or four years.

“You deal with them in order of importance. Anyone who cannot be completed in the first year can now be moved to the first batch next year. It is not the idea of ​​a director who leaves with his car. It also has to do with something called zero-based budgeting.

“When we talk about the international accounting standard IPAS, we are talking about the capitalization of our assets. They say we are currently applying for IPAS but I don’t see it that way because every year we budget for the same thing. why should we throw away the chair used by the director and buy another chair and buy another for the next director. why should the director leave with the vehicle bought just two years ago and another director has to buy a new vehicle.

“No, all this must be capitalized and amortized as is done in the private sector. It is when we do this that we can eliminate waste.

While providing an update on the activities of the Institute, the Registrar/CEO of CITM observed that the organization seeks to create a pathway towards promoting the study, the practice of good treasury management as a safeguard against fraud, misuse/misappropriation of resources in the custody of fund managers in the private and public sectors.

“The Institute seeks to institutionalize the mechanism of prevention by diligently encouraging the study and practice of the profession as obtained in the major economies of the world, harnessing best practices through research and the cross-fertilization of ideas of similar research institutes and organizations currently available in about 54 countries around the world.

“This would in turn lead to developing world-class individuals and well-grounded professionals in treasury management.”

He asserted that when the operation of cash management is allowed to impact the economy of an entity, the following effects would be beneficial: businesses will operate with a smaller amount of cash, supervision and management cash flows and its balances will be better managed and impacted; there would be better service from the banks, proper allocation of funds will be achieved; fraud and embezzlement would be minimized; the risk of loss in managing cash investments will be eliminated; businesses would operate at the minimum cost of funds possible in the economy of their home-based authorities and institutions in Nigeria.

He added that the promotion, study and practice of good treasury management as a safeguard against fraud, outright embezzlement, emasculations, diversion/misuse of scarce resources in safekeeping/ custodial fund managers.


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