There is a Yoruba adage, which says that “no matter how grown a child becomes, he cannot as well have enough rags as his father”. This preludes the over ambitious quest of the Nigeria Deposit Insurance Corporation (NDIC) in seeking an amendment of its Act of 2006, an exercise it embarked upon sometime 2014.  I have watched with keen interest since the debate started at the two chambers of the National Assembly – House of Representatives and the Senate – between the Central Bank of Nigeria (CBN) and the Corporation as recorded by the media.

The NDIC as a creation of the CBN (based on the recommendation of the former Governor of the Bank, Mr. Ola Vincent) and as envisioned by its founding fathers, was to take the responsibility of an insurer to all deposit liabilities and other deposit taking financial institutions operating in the country, giving assistance to insured institutions in the interest of depositors in case of imminent or actual financial difficulties, more importantly, where suspension of payments is threatened to safeguard public confidence in the banking system.


The Corporation is also to guarantee payment to depositors in case of imminent or actual suspension of payments by insured institutions up to a maximum amount as prescribed for in Section 20 of its Act, while assisting monetary authorities (the CBN) in formulating and implementing banking policy to ensure sound banking practice and fair competition among insured institutions in the land. And lastly, it is to pursue other measures necessary to achieve the functions of the Corporation that are not negative to the objects of the Corporation.

The above responsibilities are not different from what operates in other jurisdictions. My chanced visit to the public hearing organized by the Senate Committee on Banking, Insurance and Other Financial Institutions on Monday 9th March, 2015 on the amendment seeking a repeal of the Nigeria Deposit Insurance Corporation (NDIC) Act 2012 Bill, 2015 prompted this article to shed more light on what many agree to be the mischief and misadventure of the Corporation. One wonders what NDIC wants. Who are the faceless people goading NDIC on this unnecessary ego trip? The Corporation has been operating with the Act since June 1988 when it was established and even when it’s Act was amended in 2006, collaborating with the CBN in ensuring strong financial system. This endeavor looks to me like an exercise in mischief and obviously misguided. As rightly noted by one of the speakers on the day of the public hearing, NDIC is supposed to support the CBN and not to undermine or supplant it. Peradventure the prayers of the Corporation are answered by the two chambers aptly seen as controversial (even the way they have been conducting themselves on this matter), it may erode the statutory functions of the CBN, thus putting in place two regulators in the banking sector. Then you ask – What are the issues? There has not been friction in the operational mode adopted by the two agencies, so why asking for powers you cannot have nor have the capacity to use?

As combative as the NDIC delegation led by its Managing Director, Umaru Ibrahim, its influential Board Chairman, Ambassador Hassan Adamu and other top shots of the Corporation was at the public hearing, they were indeed shocked by the caliber of CBN delegation and superior arguments marshaled by the Central Bank Governor, Mr. Godwin Emefiele, who was represented by a deputy governor, Suleiman Barau, two of his colleagues Adebayo Adelabu, Joseph Nnanna, supported by some ex-deputy governors, Tunde Lemo and Victor Odozi  made the Committee headed by Senator Bassey Edet Otu to realize that certain provisions in the amendment Act sought by the Corporation will be calling for chaos by conferring conflicting supervisory role and powers on the Corporation as demanded, a statutory mandate conferred on the CBN. Ironically, NDIC said it was not seeking competition of roles with the apex bank, nor was it seeking to usurp CBN’s powers, but its request to the National Assembly contradicts this position. If it wants to continue with its collaborative role as it has been for the past 25 years, why did it approach the law makers for certain powers as: to license banks, power to supervise banks without recourse to the CBN, power to determine the licenses of banks and power to appoint itself as liquidator.

It is obvious that the powers being sought by the NDIC is not only to make itself the judge but also the juror in cases involving banks that are fraught with dangers, not minding that its mandate is to ensure it carries out its functions as a risk minimizer, and that depositors of distressed banks and other deposit taking financial institutions are paid in good time. This is indeed a recipe for financial instability – an ingredient for chaos and anarchy. This is not the norm globally.  More worrisome was the indifferent attitude of the Minister of Finance and its Minister of State who were represented by the Director, Home Finance department. He urged the Committee to do the right thing, while he failed to proffer a way out to assist the Committee in making informed decision. As a critical stakeholder, it was expected of the Minister of State for Finance to come out with a position, rather the ministry preferred to sit on the fence not wanting to hurt either party. The Ministry’s position could also be interpreted as supportive of the NDIC move, because as a supervising ministry over NDIC it ought to have dissuaded the agency from embarking on this mischief if it is not on a vindictive or destructive mission against the CBN.

Until the public hearing by the Senate Committee of that March 9th 2015, both Committees of the two chambers on banking, insurance and other financial institutions never considered credible or sane the arguments canvassed by the CBN nor good enough to drop the Bill. However, the argument of the CBN delegation and other patriotic Nigerians who graced the occasion may have probably swayed the Senate Committee (or woken them up from their slumber) from their unpretentious support for the NDIC move and may have made them see reason on why the status quo must be maintained. Though it urged a continued harmonious collaboration between the two agencies in order to ensure a strong financial system pending the outcome of the Committee’s recommendation, it must be considered by the Committee that, global best practice confers supervisory role on Central Banks, while the NDIC face their mandate of insuring deposit insurers.

Does it mean that NDIC has now grown up to challenge the authority of its ‘parent’? Functions of deposit insurers in other jurisdictions cited by NDIC to support its claim are quite alien, arbitrary and unreasonable to Nigeria’s peculiar environment, which is not different from what operates in more advanced economies such as the United Kingdom, Canada, Japan or Malaysia to mention but  a few.

Duplicating powers between the agencies that had hitherto been working together and harmoniously is good for the system and should be enhanced for a stronger and healthy financial system than causing unnecessary hiccups, power struggle or distractions that may badly hurt the economy. If the harmony was never broken, why seek to mend? The Central Bank on its own cannot even ensure a stronger financial system without the support of other complimentary agencies.

My take on this matter is for the Committees of the two chambers to take into consideration historical perspectives of the two institutions and allow reason to prevail when taking their decision. An error of judgment on this matter will not only place their names in the bad section of Nigeria’s financial sector history, but posterity will never forgive them. Few words are enough for the wise.

We need stronger collaboration between the CBN and NDIC, not war.  The opening adage literally translate to – no matter how creditably NDIC may have performed, locally or is recognized internationally for its good deeds, it would not have been able to achieve those feats without the support and collaboration of the Central Bank of Nigeria, neither can it claim to have the experience and wherewithal of the apex bank, why does it then want to rock the boat? Thus, as the Committee Chairman proposed a constitution of financial experts and elders in the sector to assist them in their consideration of this Bill, it is hoped that whatever decision reached will be in the interest of Nigeria and its financial system, and not to serve the interest of some selfish and over ambitious characters who crave unduly for power.

Ademola Bakare is an Abuja based media practitioner

email: demobakare1@gmail.com phone:  08052737459,

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