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The NDIC-CBN tango

In the last many days, I have watched with dismay the tango being played between the Nigerian Insurance Deposit Insurance...

In the last many days, I have watched with dismay the tango being played between the Nigerian Insurance Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN). These two most senior regulators of our entire financial institutions have been so loud recently, and all for the wrong reasons.

The CBN has earned the displeasure of the Nigerian public since the currency exchange debacle that almost ruined the election. With so many infractions in the trail of the CBN Governor, Godwin Emefiele, no one was surprised when Bola Tinubu, on assumption of office as the president, had him suspended from office and detained as well. The reason for his detention is yet to see the light of day. Whatever it is, it must be weighty enough to have had him incarcerated for so many days now.

The chairman of the newly appointed board of the NDIC, Dr Abdul-Hakeem M. Abdullateef, has been covering yards in the media decrying the new NDIC bill signed by the former President, Muhammadu Buhari, a few days before he relinquished office. The new bill essentially has swept away Abdullateef’s office as Chairman of the NDIC along with all the independent board members. The new bill has the permanent secretary Ministry of Finance (MOF) as chairman and a host of technocrats as members. The incredible part of this saga is that the members of the new board of directors inaugurated by the Minister of Finance on May 25, 2023, were nominated under the provision of the NDIC Act 2006, which had been repealed by the National Assembly and was in the president’s office for his signature.

The president promptly signed the bill into Act the next day after the inauguration of the new board of directors. It sounds incredible, but that defines most of the hurried actions of the former president in the last few hours of his term. Now, this tardiness on the part of the MOF, the CBN, and the Presidency is what galls the NDIC chairman. In addition, the chairman of NDIC is even asserting that the bill the president signed is not what came from the National Assembly. In effect, Dr. Abdullateef is alleging some skullduggery on the part of CBN whereby some sections have been smuggled into the bill en route or at the Villa. He said, ‘This is the purported new act of the NDIC and I tell you for nothing that this is ‘Emefiele’s act’…. This document that was signed is materially different from the vote and proceedings of the National Assembly that passed it.”

It is surprising that despite the brouhaha raised by the NDIC chairman, it has been mum from the CBN side. Maybe because they have bigger problems to contend with, as their helmsman is absent in detention elsewhere. Nevertheless, it is proper for these contending parties to put matters in perspective. The fact is that the functions of the NDIC today were all performed by a department of the CBN before 1989 when the NDIC came into being. Readers might recall that from the mid-1980s the Babangida military regime had begun an ambitious programme of deregulation of the Nigerian economy allowing more private participation. Consequently, the banking sector expanded tremendously with the prospects of failures so much so that the banking regulation department in the CBN could not adequately cope with the deluge of new banks.

Actually, the CBN has been planning for a deposit insurer since 1983 but it was the expansion in the banking sector that brought it forward. The NDIC came into being via Decree 22 of 1988. The new corporation coming from the bowel of the CBN was very much a CBN entity. The governor of the CBN at the time, Abdulkadir Ahmed, was the pioneer chairman of the NDIC Board. The pioneer managing director, John Ebhodaghe, was the erstwhile director of Banking Supervision in the CBN. The permanent secretary of MOF was a member of the board along with two other technocrats. However, this did not stop the new entity from recruiting staff away from the CBN, from the relevant disciplines, and from all over the country.

Things worked well between the NDIC and the CBN for the first few years until the mid-1990s when differences started to manifest. That was when the NDIC was able to wrest its independence when the Decree was changed in 1997 to allow for a board mainly composed of members outside of the CBN and MOF.

However, the relationship continued to be close as the successor to John Ebhodage as managing director was Ganiyu Ogunleye also from the CBN, where he was the director of Banking Supervision.

But one cannot take it away from the NDIC that since its birth it had continued to grow in leaps and bounds. They have a good record of staff selection, training, and remuneration such that their staff are kept away from temptation. The corporation has had a record of unparalleled management stability particularly at the top.

In all its 34 years in existence, the NDIC has had only four managing directors. They have performed their functions of banking supervision creditably. It is to their credit principally that we have fewer banking failures and shutdowns.

Then why is the CBN trying to clip its wings? We return to the subject next week.

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