JOSEPH INOKOTONG reports that the Deposit Insurance System (DIS) helps in no small measure in enhancing Nigeria’s financial system, and by extension instilling confidence in the economy.
A financial system encumbered by a struggling economy occasioned by dwindling macroeconomic fundamentals often portends a bad omen for the citizens of such a country. In Nigeria, the economy at present cannot be said to be in good stead as inflation and exchange rates seem to spiral out of control.
The resultant effect of the twin evil has manifested in a high cost of living, and the financial system cannot be insulated from the happenings in the economy. Already, signs of hoarding of the Naira have emerged in addition to other malfeasance. These could spell doom to the financial system if not properly handled.
Viewing from this perspective, the role of the Deposit Insurance System (DIS) has become a critical component of the financial safety net by continuing to play critical roles in complementing the drive of the Central Bank of Nigeria (CBN) in promoting stability in the financial system.
This becomes more significant for the Nigeria Deposit Insurance Corporation (NDIC) with a broad mandate of Risk Minimiser. As expected, the Deposit Insurer has always been impacted by the challenges that confront the financial system at various times. Though some of the challenges are universal, others are, however, unique. The desire to strengthen the banks through prudential thresholds and other regulatory instruments calls for collaboration with all relevant stakeholders in the Nigerian financial system.
It is, therefore, profound and instructive that the NDIC has been working assiduously to share thoughts, knowledge and experiences with critical stakeholders, to define a brighter and insightful future for the practice of DIS in Nigeria.
At a recent workshop for critical stakeholders, with the theme: Stocktaking of Deposit Insurance Practice: Assessing the Past, Evaluating the Present and Forecasting the Future, the NDIC unpacked some of the issues to be put in perspective to include the adequacy of the deposit insurance coverage; developments in bank distress resolution; the role of technology in the future of deposit insurance; faster reimbursement of depositors in the event of bank failure and of course, the roles of the media in promoting fintech in the banking system, amongst others.
The NDIC under the leadership of Bello Hassan, Managing Director/Chief Executive, has laid out the key focus of the management team to scale up the deposit insurance framework; provide timely support to insured institutions as and when required; ensure faster and orderly resolutions of liquidated insured institutions; as well as assist the monetary authority in promoting the stability of the banking system. This will enhance the stability of the financial system.
Hassan told his audience that to deliver on this, which is in harmony with the vision of the corporation: “To be one of the best deposit insurers in the world”, the NDIC launched the 2021 – 2025 Strategic Plan, which was formulated in consideration of current realities and trends, as well as the desire to differentiate the corporation by providing excellent and efficient services to its stakeholders across the board.
He pointed out that the corporation’s commitment in this regard has not gone without yielding the desired results. “We have introduced the Single Customer View (SCV) framework that has enhanced speedy payment of insured sums to depositors of closed banks; we have enhanced collaboration with the bar and the bench, leading to speedy dispensation of justice and more informed judgments on failed banks cases; we have equally put in place policy and framework on Alternative Dispute Resolution (ADR) for an out-of-court settlement, which had enabled us to resolve some hitherto protracted failed bank litigations; we have reviewed the Framework for Differential Premium Assessment System (DPAS) to make it more risk-sensitive and account for significant developments that have taken place in the Nigerian banking system since its adoption in 2008; and we have established a special desk at the Economic and Financial Crimes Commission (EFCC) which has energised investigation and prosecution of parties responsible for failure of banks.”
In addition, the corporation said it had also reached an advanced stage in the review of the maximum deposit insurance coverage, to account for the impact of macroeconomic developments, since its last review. The NDIC believes that the new coverage level, once approved will go a long way in reinforcing depositors’ confidence in its deposit guarantee scheme.
In complementing the consumer protection efforts of the CBN, Mr Hassan said the NDIC has enhanced public awareness of the benefits and limitations of the deposit insurance system and financial literacy, to reduce the rate at which small depositors are being defrauded, thereby enhancing confidence in the banking system. The corporation has also invigorated its liquidation activities and greatly increased its debt recovery rate leading to the declaration of 100 percent liquidation dividends to depositors of over 20 deposit money banks’ inliquidation. It has also improved its systems, processes, and procedures to promote transparency and accountability in its operations, amongst other sterling achievements.
These efforts have helped in no small measure in enhancing Nigeria’s financial system and, by extension, instilling confidence in the economy.
It is, therefore, not surprising that the corporation has been identified for various special recognitions and awards amongst the comity of ministries, departments, and agencies (MDAs) by credible bodies and institutions.
Some of the accolades received are as follows: Year 2021 and 2023 Overall Best Public Institution among 360 MDAs in the Independent Corrupt Practices and Other Related Offences Commission’s (ICPC) Ethics and Integrity Compliance Scorecard (EICS); First Position in the 2021 Transparency and Integrity Index, a public sector assessment by the Center for Fiscal Transparency & Integrity Watch (CeFTIW), a non-governmental and non-partisan organisation established in 2016 and supported by the MacArthur Foundation with the aim of promoting accountability and transparency within the public sector; Platinum Award in 2022 by the Bureau of Public Service Reform (BPSR) after the deployment of its Self-Assessment Tool (SAT) to federal public institutions to assess the broad areas of governance, financial management, strategic planning, operational leadership, procurement management, etc; attainment of three ISO Certifications in 2023, through MSECB, a leading international provider of Audit and Certification Services, namely: Information Security Management System ISO/IEC 27001:2013, IT Service Management System ISO/IEC 20000-1:2011, and Business Continuity Management System, ISO 22301; 2023 Best Performing Ministerial Servicom Unit (MSU) in the Team “C” Category for Ministries, Departments and Agencies (MDAs) by the SERVICOM Office of the Presidency; 2022 Best Contributing Employer in Human Resources Development by the Industrial Training Fund (ITF); election of the Managing Director/Chief Executive of the Corporation into the Executive Council of the International Association of Deposit Insurers (IADI) in October 2022; and election of the Managing Director/Chief Executive of the corporation as the Vice-Chairperson of the IADI-Africa Regional Committee in September 2023.
These awards and recognitions bear eloquent testimonies to the irrevocable commitment of the NDIC to bring about a paradigm shift in the discharge of the corporation’s mandate. It is, therefore, evident that in discharging its functions of deposit insurance, the NDIC has gone a step further in preserving the financial system. The numerous recognitions received for works done have strengthened its resolve for a more robust implementation of the deposit insurance system in Nigeria, to complement the Central Bank’s efforts in strengthening the safety, soundness and stability of the financial system.
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