Calm to return after TSA scramble

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Thursday, September 17, 2015 11:14AM / FBN Capital Research   

A CBN circular in February directed all deposit money banks (DMBs) to implement e-collection for the government. The vehicle is a technology platform deployed by the FGN for the collection and remittance of all revenue of ministries, departments and agencies (MDAs) to a consolidated account domiciled with the CBN.


This marked the beginning of the full implementation of the Treasury Single Account (TSA) system in Nigeria. The deadline for compliance was Tuesday this week. Press reports are indicating that N1.5trn (US$7.5bn) of TSA funds have now been lodged with the CBN.

In March 2015 total public sector deposits were N2.0trn, equivalent to c.15% of banks’ total deposits.

Although the overnight interbank rate spiked, the 30-day and longer tenor rates have remained relatively stable (see chart). The initial spike in the overnight rates was not unusual. A similar reaction occurs when there is a delay with the FAAC allocation. We view this as a temporary shock.

TSA deposits should not be seen in the same light as CRR funds; the latter are sterilized by the CBN. As such, the impact on fx should be limited.

The loss of the TSA deposits is a negative for the banks but should be partly offset by the return of CRR funds from the CBN on those deposits. Additionally, banks have an opportunity to generate fees via revenue collection.



The MPC is scheduled to meet on Monday and Tuesday next week. Banks may be hoping for some relief through a reduction in the CRR of 31% now that the FGN has achieved its aim with the TSA.

The most important result for the government of this move to a consolidated account at the CBN should be improved transparency and the plugging of leakages.

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