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Banks Lose N75bn Revenue to TSA in 16 Months

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  • Banks Lose N75bn Revenue to TSA in 16 Months

Since the commencement of the Treasury Single Account in September 2016, a total of N75.2bn has been lost in revenue by the Deposit Money Banks as a result of the implementation of the policy.

The amount represents the various charges and account maintenance fees, which where hitherto imposed by banks for holding government funds estimated at N4.7bn monthly.

The TSA is a platform, introduced by the Federal Government to unify all its accounts by ensuring that all monies belonging to the government are kept with the Central Bank of Nigeria.

The initiative, which commenced fully in September 2015, had been complied with by over 900 agencies of the government with 20,000 bank accounts closed and the sum of N5.2tn moved from banks to the CBN.

Investigations by our correspondent revealed that before the policy was introduced into the public sector, as part of the public financial management reforms, a monthly sum of N4.7bn was incurred by the Federal Government as bank charges, interest on loans, and account maintenance fees among other charges.

These fees, it was learnt, served as income to the various banks where the fund of the ministries, departments and agencies of government were domiciled.

It was gathered that the withdrawal of the funds from banks had made it difficult to impose any charges on the Federal Government’s funds as the government now maintains a single account for all its agencies with the CBN.

The Accountant General of the Federation, Mr. Ahmed Idris, who confirmed this, told our correspondent in an interview that the government no longer incurred the N4.7bn monthly bank charges on its deposits.

He explained that through the policy, the government had been able to block leakages and abuse, which had characterised the public sector before its commencement in October 2015.

Apart from blocking leakages, Idris said the TSA initiative had assisted the government to overcome the burden of indiscriminate borrowings by the MDAs, thus saving the government a lot of bank charges associated with such borrowings.

He said, “The TSA has been able to consolidate all resources of the government into a particular single form and we have been able to see the resources of governments coming together into a single window, whereby at any given time, we can say this is how much the government has.

“We have been able to stop the numerous accounts spread across the Deposit Money Banks with the attendant cost of keeping such accounts.

“We stopped a whooping sum of N4.7bn monthly in cost of keeping those accounts, largely the cost of borrowing because there could be over drafts; there could be charges monthly. That has been stopped since the introduction of the TSA.

“We have been able to track the government revenue; we have been able to see revenue inflow and that has helped us to harness our revenue in that direction. And the TSA has brought about transparency in terms of delivery.”

The TSA policy had led to job losses in banks as a result of the decline in deposits, which had impacted negatively on the profitability of banks, analysts said.

The huge decline in banks deposits, according to sources in the banking sector, have forced most of the banks to increase the targets given to bank workers in a bid to improve their liquidity position.

A top official in the banking sector told our correspondent on Friday on the condition of anonymity that the recent mass sacking in the industry was as a result of the declining rate of deposit mobilisation by some of the bank workers.

The official said the withdrawal of the government funds through the implementation of the TSA had badly affected the amount of bank deposits, adding that this was one of the reasons why many of the banks resorted to mass sacking of their workers.

But when asked whether the government was considering any palliative in the banking sector to cushion the negative impact of the decline in revenue caused by the TSA, the AGF ruled out such measures.

He said, “The TSA has challenged banks to return to traditional banking business. Banks are never created to hold public funds or government funds virtually for free. No, that is not banking. Nowhere in the world are banks relying on public funds to survive. So, banks are now becoming more innovative and that innovation is what will bring them back to business.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Banking Sector

Wema Bank, MOD Launch Scheme For International Students

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Wema Bank has launched an advisory and loan scheme, the Education Advisory Service, in partnership with MOD Education for young Nigerians wishing to study abroad.

Following foreign exchange control measures introduced by the government, parents and guardians have experienced difficulties paying tuition fees for their children and wards studying abroad. Some who have the money don’t know the requirements for foreign admission and waste lots of time and resources in fruitless searches.

But to help them surmount these challenges, Wema Bank has partnered with MOD Education, a professional student advisory, marketing, recruitment and placement company for the advisory services and school fees advance facility. The partnership, which was launched on Friday, April 9 at Eko Hotels, Victoria Island, will see both organizations providing innovative education advisory services and funds for international students.

Speaking about the partnership, Divisional Head, Retail Business, Wema Bank, Dotun Ifebogun, explained that the initiative would aid hundreds of thousands of Nigerians requiring advisory and financial support to pay for their wards in foreign schools.

He explained that Wema Bank does not want the aspirations of Nigerians desirous of foreign education truncated, hence the support.

“We are interested in everything that concerns our customers, and education is one of them. Some parents and guardians desire a certain quality of education for their wards outside the shores of Nigeria, and we would be able to assist them with this product. Our school fees advance loan results from the requests of parents and guardians who need to get short term financial support to meet the tuition obligation of their wards irrespective of the constant increase in fees.

“There’s nothing as heartbreaking as withdrawing a child already in a foreign university or being unable to raise the requisite forex for a child offered admission in a top-rated foreign institution of higher learning. But our school fees advance loan will take care of this problem and help secure the futures of such students – both undergraduates and postgraduates. The fact that you get counsel from the right sources at any particular time is another benefit of this product.

Also, the Managing Director, MOD Education, Michael Dosunmu, expressed gratitude to Wema Bank for the partnership. “Wema Bank has been supportive to us as a business and it was just a natural marriage. We trust the bank enough to bank with them, and our trust is enough to recommend it to others.”

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Finance

NAIC Pays N1.7bn Claims to Farmers

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The Nigerian Agricultural Insurance Corporation (NAIC) said it paid a total of N1.7 billion claims to over 5,000 farmers in the past two years.

NAIC, which is the only federal government owned insurance company authorised to offer agric insurance services to farmers at subsidised rate, said a breakdown of the paid claims showed that it paid N856 million to insured farmers in 2019 and N848 million in 2020.

Commenting on the development, NAIC Managing Director, Mrs. Folashade Joseph, said the claims were paid to the farmers to cover losses incurred in the course of doing business.

Joseph, enjoined agricultural investors and lending institutions to continue to partner NAIC by taking agricultural insurance cover that will enable them remain firm in business despite unforeseen circumstances from weather conditions and other risks in order to realise the food security agenda of President Muhammadu Buhari.

She said the above-mentioned amount was shared among five million farmers who suffered various setbacks in their farms as a result of natural course.

According to her, the NAIC Agric Insurance Scheme was launched in 1987 by federal government to restore the confidence and productivity of Nigerian farmers who suffered losses as a result of natural disaster such as flood, drought, pest and diseases.

The NAIC boss explained that the essence of the sensitisation campaign embarked by the corporation was to let the farmers know and understand exactly what NAIC does, the importance of insurance, and make them understand how insurance works, how they can access NAIC products and services, how to process their claims, as well as what insurance stands to do for them.

“Agribusiness is evolving fast and so many risks are being thrown up, many new participants are coming into the business of agriculture, and the risks are on the increase if you look at them across the value chain, there is no so many participants so we need to keep sensitising the farmers and let them know we are serving them, and we need to know from them how to serve them,” she explained.

Speaking further, she said, “our assurance to farmers is that when they are insured and they suffer losses covered by any of the policies they purchased, including natural disasters and whatever, they will get paid for their losses, and that is the purpose of insurance and setting up NAIC.

“Our motor is ‘Plowing the Farmer Back to Business, Plowing the Farmers into Prosperity’, and we settle claims.”

She said NAIC currently deals with thousands of farmers (Small, Medium, and Large scale farmers) across the country, adding that the corporation serves farmers with investment as little as N100, 000, and at the same time serves multinational farmers.

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Banking Sector

UBA Organises Capacity Building Forum

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As part of its commitment to support the growth and sustainability of micro, small and medium-scale enterprises (MSME) in the continent, the United Bank for Africa (UBA) Plc, is set to organise the next edition of its UBA Business Series.

The UBA Business Series which is a monthly event, is an MSME Workshop as well as a capacity building initiative of the bank where business leaders and professionals share well-researched insights on best practices for running successful businesses, especially in the face of the difficult operating environment that dominates the African business landscape.

Through this initiative, UBA has been assisting with essential tips to help businesses re-examine their models and strategies and ensure that they stay afloat and remain thriving, a statement from the bank explained.

The topic for the next edition of the series is, “Managing Performance for Business Growth,” and it will be held today, via Microsoft Teams.

At this session, the Managing Director, Secure ID Limited, Mrs Kofo Akinkugbe, will be sharing useful tips and insights on the key strategies of performance management to boost business growth.

Akinkugbe is the founder of SecureID Nigeria, a MasterCard, VISA and Verve certified Smartcard Personalization Bureau and Digital Technology company. She currently serves as the Managing Director/CEO, Secure Card Manufacturing, – a Smartcard manufacturing plant producing high security identity cards and documents for the Banking, Telecoms and Public sectors across Africa and beyond.

UBA’s Head, SME Banking, Sampson Aneke said of Akinkugbe, “with her vast experience garnered over the years from various sectors, she will help business owners understand how performance management strategies can be effectively implemented to ensure business growth.”

He emphasised UBA’s commitment and deep passion for small businesses, which according to him, remains the engine of any developing economy adding, “We know small businesses are the backbone of the economy in every country. In many climes, businesses with fewer than 100 employees account for 98.2 per cent of all businesses. This no doubt captures the importance of SMEs to a thriving economy which is why UBA is committed to seeing them flourish.”

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