Fragmented Banking vs. Consolidating Liquidity
 
In traditional public financial operations, individual ministries and state agencies open separate commercial bank accounts to manage their daily spending. This fragmented structure obscures visibility, leaving idle cash sitting in hundreds of accounts while the central treasury borrows expensive short-term funds to cover deficits elsewhere.
The Operational Structure of a TSA
The Treasury Single Account (TSA) consolidates all government cash balances into a unified banking structure, typically maintained at the Central Bank.
                       [ Central Bank of Kenya / Central Bank ]
                                          |
                +-------------------------+-------------------------+

                |               Treasury Single Account             |
                +-------------------------+-------------------------+
                                          |
        +---------------------------------+---------------------------------+
        v                                 v                                 v
[ Zero-Balance Account:           [ Zero-Balance Account:           [ Zero-Balance Account:
   Ministry of Health ]              Ministry of Education ]           Local Authorities ]

Under this architecture, individual ministries maintain Zero-Balance Accounts (ZBAs) at commercial or central banks. At the close of every business day, the balances in these sub-accounts are automatically swept into the main central TSA account. Ministries retain spending authority through electronic ledger allocations within the system, but the physical cash remains centralized.
Benefits and Challenges of TSA Implementation
Implementing a TSA optimizes liquidity management, reduces public debt servicing costs by minimizing short-term borrowing, and provides complete transparency over state cash flows. However, transitioning to a TSA requires robust digital infrastructure, clear agreements with commercial banking networks, and a strong PFMIS capable of processing high volumes of daily electronic transactions.
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