To breathe, aviation agencies want TSA shackles broken

The aviation agencies are in dire need of financial independence. They cannot spend what they earn to develop the sector the way they claimed they would have done. Who knows, their agitation could make the Federal Government remove them from the Treasury Single Account (TSA) which has helped to curb massive heists in MDAs but at the same time slowed down developmental projects, Writes, WOLE SHADARE

Background

The Treasury Single Account (TSA) policy was introduced to block financial leakages, promote transparency, and prevent mismanagement of the government’s revenue, unifies all government accounts, enabling it to prevent revenue loss and mismanagement by revenue-generating agencies.

Former President, Muhammad Buhari’s directive to all federal Ministries, Departments, and Agencies (MDAs) to start paying all government revenues, incomes, and other receipts into a unified pool of single accounts with the Central Bank of Nigeria (CBN), is a bold and highly commendable move directed at one of the bastions of corruption in the polity, namely, public institutions.

The TSA is a unified structure of government bank accounts enabling consolidation and optimal utilisation of government cash resources. Through this bank account or set of linked bank accounts, the government transacts all its receipts and payments and gets a consolidated view of its cash position at any given time.

Apparently, a master stroke against a tactless financial strategy emanating from an unholy alliance between banks and MDAs, the current implementation of this unified accounting structure, rightly called the Treasury Single Account (TSA), is laden with high expectations of economic prospects owing to its possibility of ensuring transparency and accountability. It is equally laden with slowing critical government agencies down and far-flung from providing for their needs.

Financial indiscipline

It is common that audit reports in Nigeria at all levels, reveal financial discipline, accountability, probity, procedures, overthrow of transparency, which the treasuries were set up to establish and protect.

These abuses/breaches range from duplication of contracts, over-valuation of contracts, non-certification of payment vouchers by the internal fictitious payments of contracts, and non-certification auditor among others. Other frauds in treasury activities include overpayment to existing staff, payment of salaries and allowances to dead or retired staff, and ghost workers.

New Telegraph examines the effect of the policy on public financial management in Nigeria. While looking at the extent to which TSA can block financial leakages, and promote transparency and accountability in public financial management, there has been criticism, albeit silently, silently how it engenders slow or snail-like speed for many of the agencies.

The first to be considered or to be considered to be expunged from the TSA is the Federal Capital Territory (FCT), Abuja when President Bola Ahmed Tinubu approved the removal of Abuja from the TSA.

Wike’s example

The FCT Minister, Mr. Nyesom Wike said TSA posed challenges for FCTA in securing funding for projects, resulting in numerous unfinished projects in the capital city for many years.

The Managing Director of the Nigerian Airspace Management Agency (NAMA) Tayib Odunowo in a chat with journalists at the weekend called for liberation from TSA constraints to boost functionality.

He emphasised NAMA’s self-sufficiency and voiced concerns over the 40% revenue deduction, hindering major projects for operational efficiency, saying, “Eliminating this deduction is crucial for our thriving.”

Odunowo highlighted financial strain, depicting an N500,000 per hour cost for running generators during flight extensions in Ilorin while revealing challenges in cost recovery due to outdated charges, stressing that the TSA limits finances for critical infrastructure.

“We have issues of debt. Let me paint a picture for an hour in Ilorin. The charge is N50000. They don’t have power and so we run on generators. That costs about N500,000 per hour given what it powers.”

Experts’ views

Aviation consultant, Dr. Daniel Young agreed that NAMA needs to be allowed to breathe, but said, “But again, how are the internal financial structures in NAMA applying a wide lens in their thinking to create new market spaces that will support the ever-growing innovations in the industry.

Young recalled that for more than 12 years now, particularly under the administration of Mr. Osita Chidoka as Minister of Aviation, a revenue review committee was set up to assess NAMA’s revenue performance, saying what was discovered was very shameful.

“What is lacking here, as far as l can see, is the courage of leadership to abandon the ritual comfort of traditional revenue path and introduce unconventional thinking that would allow them to transfer the burden of key equipment requirements to B2B barter exchanges, which essentially would mean that the 40% becomes a form of intangible revenue (securing without, breaking the rules, the most valuable component of their business investment requirements)

“The remaining revenue, which represents operating capital, would be left for the government to deduct from. What NAMA needs is a quantum leap in valuable creation, not an appeal for help.”

He further stated that the call for its removal from TSA would lead to the complete warehousing of all capital projects by the government, which would make the organisation purely an airspace administrative agency.

“If the primary reason for asking to be excused from the TSA is to have constant liquidity to address emergency issues, then why shouldn’t there be direct financing from the government and strong maintenance agreement with OEMs without recourse to NAMA who presently does direct procurement and maintenance?.  We should be careful what we ask.”

Not a few believe that it would be so much easier if all agencies would follow the key principles of the International Civil Aviation Organisation (ICAO) without the need to reinvent the wheel.

To them, there is absolutely no need to rewrite laws and acts; aviation is an international business, and “domesticating” everything makes it confusing and discouraging to investors (local and foreign).

ICAO Doc 9082 says it (almost all) when it comes to revenue of Air Navigation Service Providers (ANSP) and other agencies.

It emphasizes a simple adherence to the ICAO Doc which states the principles of, “non-discrimination, cost-relatedness, transparency and consultation with users”. This applies to ANSP, other agencies like NiMet in our case, and airport charges.

Former commandant of the Murtala Mohammed Airport, Lagos, Group Capt. John Ojikutu said NAMA urging withdrawal from TSA could reduce its 23% entitlement from the Tickets Sales Charge (TSC) and Chartered Flights Charges (CFC).

His words, “Again, if you don’t know what you are looking for, you can never find or get it. First, what is the NAMA  revenue earnings from the air annual traffic and the 23% available to it from the 5% collected on TSC, CSC, and Chartered Flights Charges CFC? The government must know that before determining the percentage required from the earnings.

“Government must also know the financial need on the facilities and infrastructure Periodic Maintenances just as the needs for manpower skills development, salaries, and remuneration: the services and administrations, etc. Without knowing these, there would be no end to intervention funds for periodic maintenance. Whatever percentage is taken should return to the agencies for development or upgrading of the Infrastructure only as recovery intervention funds.”

Last line

The advocates of financial independence are in a hurry to see this done. Their view is to let the resources of the agencies in the industry for re-investing and growth. This can only be done until the annual earnings, annual maintenance, and others are known.

 

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