The intriguing NDIC Bill 2023

Intriguingly, the Nigerian Deposit Insurance Corporation (NDIC) Bill that was signed by former President Muhammadu Buhari in his last hours in office has raised so much uproar. Here was a bill that has been in the works ever since the 8th Assembly promising to further empower the NDIC to deal with the increasing challenges of newer times. But what came out sent shockwaves across the banking industry. The new NDIC Act 2023 rather than empowering the corporation, disempowered it to a great extent.

A wise-cracking colleague likened the episode to the Senate conceiving an elephant that gave birth to a mouse.

The Act swept away many aspects of independence that gave the sinew to the NDIC to do its job of superintending over the banks. In the first place, the board would henceforth be largely composed of technocrats with the permanent secretary, Ministry of Finance as chairman with more members from the Central Bank of Nigeria (CBN). This is a throwback to the very beginnings of the NDIC in the late 1980s when the chairman of the board was the CBN governor and departmental directors of the CBN held sway in the board.

Secondly, the Act made serious breaches in the operational independence of the NDIC. Many of the oversight functions over the deposit banks hitherto independently done by the NDIC would, by the new Act, be performed only with the express approval of the CBN.

This is certainly unpalatable as over the years the NDIC has developed and nurtured a cadre of staff that have got accolades for the professional manner they have gone about their oversight functions over the banks, ensuring that depositors’ funds are safe and sound. That probably explains why we have lately seen fewer failed banks littering the streets and even where banks failed, their affairs are tidied up with minimum fuss.

Bridge banking has now seen to it that depositors no more fear losing their monies at the instance of a failed bank and the employees of the bank are doubly assured of the sanctity of their careers. This is all mostly due to the expertise of the NDIC that is widely acknowledged not only within the country but among its peers in Africa and beyond.

Now, this independence hitherto exercised by the NDIC to oversight banks without let would be seriously jeopardised by the new provisions in the Act. Apparently, the CBN now wants to be the top dog in licensing banks, regulating them, withdrawing their licenses when they fail, and determining who will wind them up. This should not be so. The CBN should concentrate on designing and implementing policies that will promote financial stability, fight inflation and defend the value of the national currency and be a prudent lender of last resort to the government. Every indication in the last many years shows that the CBN has failed woefully in these respects.

To worsen matters, the CBN under the tutelage of its suspended governor, Godwin Emefiele, expanded its functions to superintending interventions into many sectors of the economy. The CBN, in the last many years, has been making direct interventions in the agricultural and manufacturing sectors of the economy as well as into many other spurious programmes here and there. Governor Emefiele finally rounded up all these interventions as inroads to indulge in direct political affairs while holding that high office. All these hyperactivities left the primary duties of the CBN unattended and in a dysfunctional orientation.

As expected, the biggest uproar against the new Act came from the newly-appointed chairman of the NDIC board, Dr Abdul-Hakeem M. Abdullateef. He has openly been contesting the validity of the new Act as he is adamant that the bill the former president signed is inchoate and believes that it was doctored en route to the State House. His fury is understandable as the rug has just been pulled from under his feet. His appointment as chairman along with the other members of the new board was announced in January and passed to the Senate for approval in March. The National Assembly duly approved their appointment in May and the Minister of Finance inaugurated them on May 25 only to be dismissed the next day when the former president signed the controversial bill into law.

What to do? From my perspective, there is a need to ascertain the validity of the bill that the former president signed into law. With due respect to him, there are too many actions he took at the tail end of his time in the State House that to many discerning views, were hurried and without due diligence. The NDIC Act 2023 is one of them and would need scrutiny, to confirm if the bill that left the National Assembly and what the former president signed are the same thing. If found to be different, the authentic bill should, without delay, be presented to President Bola Tinubu for his consideration.

If, however, the bill and the Act happen to be the same, then some soul-searching needs to be embarked upon by all the stakeholders – the CBN, the Ministry of Finance, and the Presidency – on what kind of deposit insurance system and safety net they want. I guess the answer should be obvious: an entity with more operational independence, capable of discharging its mandate without let or hindrances.