PSAF – Nov 2015 – L2 – Q3b – Treasury Management in the Public Sector

Describe five weaknesses in Nigeria's cash management practices.

Question

Discuss any FIVE weaknesses in the current system of cash management in Nigeria.

Answer

Inadequate Tracking and Monitoring of Independent Revenue
- Poor supervision and lack of sanctions on non-remitted revenues result in a shortfall in collections that should be directed to the Consolidated Revenue Fund.
Overdependence on Federation Account
- Cash inflows are heavily reliant on statutory allocations, especially from oil revenues, leading to instability when there are fluctuations in oil revenue.
Lack of Strong Inter-Agency Collaboration
- Inefficient collaboration among revenue-collecting and monitoring agencies results in poor information sharing critical for effective cash management. Agencies like FMF, OAGF, BOF, CBN, and others operate with limited coordination.
Existence of Idle Funds
- Substantial balances in MDAs’ accounts remain idle while government continues to borrow to finance expenditures, due to lack of an integrated cash management approach.
Inability to Effectively Monitor Oil Revenue

Ineffective monitoring systems hinder efficient tracking of oil revenues. Challenges include inadequate funding, lack of skilled personnel, and poor operational capacity.