ZAMBIA’s poor public financial management, reporting, quality control and procurement practices have been a source of concern from several economic players because of distortions in the financial market and the economy in general.
For example, the scattered Government bank accounts do not give a consolidated view of the State’s cash, thus making tracking its expenditure extreme difficult.
There have been too many impediments to effective and efficient cash management because of maintaining multiple accounts with commercial banks.
However, Government has established Treasury Single Account (TSA) system aimed at unifying structure of Government bank accounts that gives a consolidated view of the cash.
The system which was launched recently as pilot project is being coordinated by the Office of the Accountant General, a directorate under the Ministry of Finance.
The Ministry of Finance, together with Eastern Province, would be the first to implement the TSA System.
By December this year, the system would have been implemented in all Ministries Provinces and other Spending Agencies (MPSA’s).
Thereafter, MPSAs would be compelled to process financial transactions using the Integrated Financial Management Information System [IFMIS].
TSA benefits include improved cash forecasting, timeliness and accuracy in reporting cash balances.
Improved monitoring and control of public revenues and expenditures and a significant reduction in short-term borrowing activities coupled with a reduction in the cost of financing Government operations are other benefits of the system.
The other benefits include efficient transmission of authorised payments from MPSA’s to the Bank of Zambia (BoZ) for settlement via the Real Time Grossing System (RTGS).
Globally, many countries have established and implementing the TSA system.
In Africa, Nigeria is one of the countries that are implementing the system.
The Federal Government of Nigeria’s TSA project, which seeks to establish a unified structure of government bank accounts, could be the single most effective mechanism for dealing with corruption in cash management in ministries and agencies.
The initiative is being championed by the Federal Ministry of Finance with the office of the accountant- general of the federation serving as the implementing agency, in active collaboration with the Central Bank of Nigeria.
According to the BusinessDay publication, the project is inspired by global best practices long established by countries across the world and has a proven record of enhancing oversight and control of government cash resources.
In the Philippines, the TSA is currently being implemented as part of the Philippine Public Finance Management (PFM) Reform Roadmap which aims to enhance the country’s overall PFM systems for a more efficient, transparent and accountable use of public funds.
It is one of the priority projects under the Philippine PFM Reform Roadmap Programme and is one of the core elements of the Government Integrated Financial Management System (GIFMIS).
Noel Nkhoma, an economist, says the TSA a tool deployed by various governments globally, to have an effective oversight on its cash resources meaning that, all idle funds sitting in the books of commercial banks are swept and consolidated into one account domiciled at the Central Bank.
He says this has been beneficial to governments as it makes available cash to utilise for social economic programmes.
Mr Nkhoma says the short to medium impact is likely to be that as the funds are being swept out of the commercial banks, the possibility of a liquidity crunch is expected as most commercial banks account for almost 60 per cent of Government deposits.
Secondly and most importantly, he says the government stands to benefit as it will no longer borrow its own money through treasury bills and government bonds resulting in huge savings on interest on the government treasury.
Mr Nkhoma, however, said the implication is that commercial banks which have been relying on Government deposits would have to take a more proactive strategy to mobilise domestic savings and private sector funds to fill the gap.
This, he says, is expected to see a rise in cost of funds

which would invariably lead to an increase in real lending rates.
“Overall, this is long overdue as the interest cost on government has been at the expense of public expenditure on health, educations and other social services,” Mr Nkhoma says.
Jesuit Centre for Theological Reflection (JCTR) media and information officer Mwiinga Shimilimo anticipate that by the time of eventual full roll-out of the system all key pre-requisite and initial undertakings for the success of the system would have been reasonably considered to thwart any future stalling of the system.
“While we appreciate that the system will make it easy to identify idle and redundant balances and also be handy in giving a real time consolidated position of Government balances, we are also alive to the reality that the system may dilute essential social sector spending against politically inclined expenditures,” she says
With the knowledge of hindsight, social sector spending had often been sacrificed amid other competing demands that were politically expedient, the JCTR, however, expect at the time of full roll-out of the TSA, social sector allocations would have been ring-fenced,” she said
The JCTR expects the system not to add any delays in releasing funds through bureaucratic approvals that went with such a system.
Mubanga Luchembe, a Lusaka, resident appreciated the initiative because it would provide a reliable information exchange interface between the Integrated Financial Management and Information Systems
“I however, propose that Food Reserve Agency be included so that it is not allowed to maintain multiple accounts with commercial banks and keep money idle to make extra money for its employee salaries and wages instead of paying farmers on time,” Mr Luchembe said
However, Mr Luchembe questioned what benchmarks, if any, could be found to objectively measure what lies in the eye of the TSA system end-user?
Secretary to the Treasury Fredson Yamba says Government would ensure that the Straight-Through Processing of payments and release of funding from treasury accounts at the Bank of Zambia (BoZ), MPSAs would be compelled to process financial transactions using the IFMIS.
“This is an immutable position as it is in this way that the Treasury will be able to monitor and evaluate transactions made in respect of expenditure of public resources. Shortcomings will be dealt with resolutely,” he said.
The people of Zambia are fatigued with incessant negative reports in the handling of public resources,” he says.
Mr Yamba says upon full implementation, the TSA would enable Government to maintain a transaction trail, monitor, control, manage and adequately report on the Government’s cash position.
This would ensure effective and efficient management of cash in-flows and out-flows, and optimize the use of public financial resources.
An electronic interface between Government/IFMIS and the Bank of Zambia has been set up and testing of the link has since commenced.
The link is targeted at facilitating the electronic transfer of funds and the exchange of other payment information needed to ensure the efficient management of public revenues and other resources.
The automation process would affect all Government expenditure related to release of funding from treasury accounts at BoZ, expenditure approvals between MPSAs on one hand and Treasury, the Central Bank and bank reconciliations.
Therefore, looking at the benefits and objectives of the TSA system, it proves to be an essential tool for consolidating and managing governments’ cash resources, thus minimising borrowing costs.
In countries, like Zambia, with fragmented government banking arrangements, so the establishment of a TSA should receive priority in the public financial management reform agenda.
It is therefore anticipated that the new initiative would help to reverse the situation where idle cash balances in bank accounts often fail to earn market related remuneration.
With the full implementation of the system would avert the situation where the Government, being unaware of these cash balances, incurs unnecessary borrowing costs on raising funds to cover perceived shortage.
It is also expected that the TSA system would helps consolidate Government cash balances, gives the ministry of finance unique oversight of all government cash-flows and brings about improvements in budget control and monitoring.