BEST DEPOSIT INSURER: NDIC’S 2020 GOAL

The year 2020 has the allure of all round-figure years.
Nations and institutions have set the year as target for attaining certain goals.
Nigeria planned to become one of the 20 largest economies in the world by 2020.
That target was pursued with considerable zeal until 2014 when oil prices started heading south as a result of the glut in the international oil market.
Even with tumbling oil prices, there was still some glimmer of hope that the target might still be met.
Africa’s largest economy had sustained an average growth of about four per cent per annum over a period of 10 years.
By the first quarter of 2016, the economy slipped into recession.
The drastic reduction in foreign exchange earnings engendered by an odd combination of low oil price and tumbling production took a toll on the naira as the exchange rate plummeted to N520 to the dollar on one frenzied day in April.
The economy lumbered out of recession in the second quarter of 2017, but no one in the federal government can now think of Nigeria joining the exclusive club of the world’s 20 largest economies by the magic year 2020.
Except someone finds the magic wand that would enable the economy grow at 10 per cent per annum, Nigeria has missed that target.
The banking industry recorded marginal growth in total assets and total deposits while there was a decline in capital adequacy ratio, increase in Non-Performing Loans (NPLs) and declining profitability due to rising operating expenses, amongst others.
According to an unpublished 2017 Annual Report and Statement of Accounts of the Nigeria Deposit Insurance Corporation (NDIC), the performance of the banking industry was generally satisfactory.
It is however gratifying that the NDIC is not deterred by Nigeria’s apparent setback on the 2020 target.
The Corporation which was established in 1988 to stabilize Nigeria’s banking industry by giving succour to small depositors in the rare case of bank failure, has set 2020 as its target year.
As a major supervisor of the banking industry, the Corporation is not known for setting unattainable targets.
It is a Nigerian institution driven by private sector knack for achieving set targets.
In 2016, a limited five years from the magic year 2020, NDIC set for itself the ambitious target of being the best deposit insurer in the world by 2020.
The target is derived from the Corporation’s renewable 2016 – 2020 Strategic Plan that is premised on four strategic themes of operational readiness, performance driven culture, effective collaboration with stakeholders and robust public awareness to promote public confidence in the deposit insurance system.
The new strategic plan was buoyed by the successful completion of some of the initiatives in the 2011-2015 plan which strengthened the Corporation’s capacity in the four strategic areas of the plan.
Out of the 47 initiatives set in the 2016 – 2020 Strategic Plan for achieving the vision of the best deposit insurer in the world by 2020, 11 had been completely implemented while 28 were on-going by 31st December, 2017, which is the second year of the ambitious target.
The implementation of the remaining eight is progressing at an appreciable pace.
The Directors, Management and entire members of staff of the Corporation are convinced that the NDIC will meet its self-imposed target of being the best deposit insurer by 2020.
The determination to meet that ambitious target could be assessed by the achievements of the Corporation in the industry in a year as challenging as 2017.
The NDIC worked in collaboration with the Central bank of Nigeria (CBN) to reduce poverty in Africa’s largest economy through a fierce battle against financial exclusion.
However, poverty is an endemic problem in Nigeria.
More than 60 per cent of Nigerians live in the rural areas.
By some estimates, about 90 per cent of the population of the rural communities have no access to financial services.
In 2012, the World Bank records showed that Nigeria had one of the lowest number of adults in sub-Saharan Africa, who borrowed money from formal financial institutions.
That assessment was a source of concern for NDIC which has been in the forefront of the battle to capture more poor rural dwellers in the country’s banking net.
Parts of the bold steps taken by the Corporation to deepen financial inclusion comprised the development of frameworks which ensured the extension of deposit insurance cover to depositors of Non-Interest Banks (NIBs) and subscribers of Mobile Money respectively up to maximum level of N500,000.00 each.
This did not only enhance public confidence in the payment system, it also went a long way in giving access to formal financial services for the hitherto financially excluded.
From NDIC’s achievements in 2017, there are strong indications that the target is feasible as the intervention of the regulators of the financial system to reduce financial exclusion yielded tremendous dividend in the year.
The number of bank accounts in the deposit money banks (DMBs) grew from 83,016,654 in 2016 to 99,114,035 at the close of business in 2017.
The phenomenal growth in the number of accounts was apparently engendered by the confidence that NDIC’s protective cover for small depositors has instilled in the banking system.
The proportion of total accounts fully covered by NDIC at N500,000 per account in DMBs increased from 82,571,145 in 2016 to 96,760,689 in 2017.
By implication, NDIC provides protective cover for 97.63 per cent of the accounts in the banking system.
By the end of 2017, NDIC’s level of risk exposure measured by the amount of insured deposits in the industry at a maximum of N500, 000 per depositor per DMB stood at N2.7 trillion or 14.29 per cent of the industry’s total deposit of N19.38 trillion.
That implies that in the nearimpossible scenario of all the banks in Nigeria collapsing at the same time, NDIC would have to dole out N2.77 trillion to small depositors under its protective cover which would have settled 97.63 per cent of the nation’s bank depositors.
And the Corporation as a deposit insurer has the financial muscle to carry the risk.
The Corporation’s deposit insurance fund grew from N827.89 billion in 2016 to N959.56 billion in 2017 even as the deposit insurer reduced the premium paid by banks from 40 to 35 basis points of each bank’s total risk in the last three years.
In view of the importance of human capital development in its quest for excellence, NDIC established a world class academy to train its Staff as well as lead the African subregion in capacity building in the impleme3nation of the Deposit Insurance Scheme (DIS) in particular.
Based on its robust programmes, the academy was accredited in 2016 by the Chartered Institute of Bankers of Nigeria (CIBN) as a training service provider for the banking industry.
The NDIC Academy had also assisted in building capacity for the implementation of the Deposit Insurance System in various jurisdictions in Africa.
In recent times, the Corporation successfully trained 17 delegates from multiple African countries.
It hosted officers from the Uganda Deposit Protection Fund (DPFU), Reserve Bank of Malawi, Reserve Bank of Lesotho, Deposit Protection Fund Board of Kenya, Deposit Insurance Board of Tanzania, Commission Bancaire del’Afrique Centrale (COBAC) of Cameroun, Banque Centrale Des Etats De L’ Afrique De L’ Ouest (BCEAO) Senegal.
Others include teams from the Central Bank of the Gambia, Bank of Tanzania, the Deposit Protection Corporation of Zimbabwe, and the Ghana Deposit Protection Corporation (GDPC).
The Managing Director/Chief Executive of NDIC, Umaru Ibrahim was first elected unopposed to take the reserved seat of the Africa Regional Committee on the Executive Council of the International Association of Deposit Insurers (IADI) at its 12th AGM and 2013 Annual Conference held in Buenos Aires, Argentina.
He was re-elected into the Executive Committee of the Association for another term of three years during the 2016 AGM which held in Seoul, South Korea.
This was in recognition of the Corporation’s outstanding contributions to the development of deposit insurance practice in Africa and the association as a whole.
NDIC has not reneged on its commitment to the effective resolution and management of failed deposittaking financial institutions under its protective cover.
In 2017, the Corporation paid an aggregate of N11.5 billion to depositors, creditors, shareholders and other stakeholders of failed financial institutions under liquidation.
That was a big leap from the N154.4 million paid in 2016.
The Corporation invested its deposit insurance fund and other funds in federal government money market instruments like bonds and treasury bills.
NDIC remitted the total sum of N55.9 billion to the Consolidated Revenue Fund (CRF) in 2017.
This is not only in compliance with the Fiscal Responsibility Act (FRA) but also as a sense of commitment by the Corporation to consistently remit 80 per cent of its operating surplus to the CRF.
With the strong foundation, sound strategy that is aligned with the global best practices and unwavering commitment, there is no gain saying the fact that the vision of NDIC to be the best deposit insurer by 2020 is achievable notwithstanding the dynamics of the Nigerian economy.