The Cabinet on January 15 endorsed the establishment of the Treasury single account (TSA), setting the stage for amalgamation of government finances scattered across many bank accounts.
A TSA is an integrated structure of government bank accounts enabling consolidation and optimum utilisation of government cash resources. Based on the principle of unity of cash and the unity of treasury, a TSA is a bank account or a set of linked accounts through which the government transacts all its receipts and payments and gets a comprehensive view of its cash position each end of day.
The government should take into account the following factors in the planned switch to TSA. Elimination or closure of bank accounts may considerably impact the banks’ liquidity and impair their intermediation role in the economy.
Banks held Sh509.8 billion in deposits from the national government and other public sector entities by June 2023, accounting for 10.4 per cent of the banking industry’s total deposits. The shift to a TSA system should, therefore, be gradual and in coordination with the correspondent banks to ensure a seamless transition.
Establishing and successfully managing a robust TSA infrastructure necessitates investing significant time, resources and expertise. Integrating disparate financial systems, streamlining workflows, and ensuring smooth transitions can be a complex and painstaking endeavour, demanding meticulous planning and unwavering commitment from all stakeholders.
Shifting to a centralised system might provoke powerful opposition from government agencies accustomed to a degree of budgetary autonomy. Comprehensively addressing concerns about potential loss of control and ensuring a collaborative implementation process is critical to maintaining a harmonious fabric of governance.
TSA’s successful implementation largely hinges on a spirit of shared purpose and collective responsibility.
Finally, consolidating vast amounts of financial data in one system creates a tempting target for cybercriminals. Implementing foolproof cybersecurity protocols and erecting a digital fortress around the TSA, armed with cutting-edge defences to repel any attempt at infiltration and unauthorised access will go a long way in safeguarding highly sensitive financial information.
