The CBN/NDIC turf battle

Many of us who have follo-wed this interesting matter closely, and were expecting a quick resolution, were rather taken aback by the diametrically opposing stance taken by the CBN to what reasonably would have been a change for the better for the NDIC, the banks and financial institutions in general. But what is it that […]

Many of us who have follo-wed this interesting matter closely, and were expecting a quick resolution, were rather taken aback by the diametrically opposing stance taken by the CBN to what reasonably would have been a change for the better for the NDIC, the banks and financial institutions in general. But what is it that the NDIC is asking that has attracted such heavy response from the CBN? The NDIC has simply gone to the National Assembly to update its Enabling Act which was last amended in 2006. Normally, agencies dutifully and routinely amend and update the laws setting them up so as to reflect existing realities to make them face the future with confidence and strength.
 Reviewing laws is a never-ending dynamic process. It is only lazy agencies run by incompetent leadership with a laidback and lackadaisical attitude that allow laws governing their operations to be many steps behind existing realities. And truly there are many such agencies that have not been able to review the laws setting them up since their inception leading to dire consequences on their operations. NDIC on the other hand has been on that route, to review its laws, three times, in its short lifetime of 25 years! After every round of bank crisis, the NDIC would quickly make an assessment, taking note of the inadequacies in its laws when battling the crisis, and request government for an update.
Considering the cumber-some nature of lawmaking, it is a major achievement for NDIC to be twice successful in this regard. After the first wave of bank crisis in the early 1990s, the NDIC got the backing of the Military Administration in 1996 to review the Enabling Act 1988 taking into consideration its inadequacies in tackling the crisis that just occurred and what new powers it needed in case another crises reared its head. When the banks were engulfed in another round of crises in the early years of the millennium, which was again successfully resolved, the NDIC dutifully went to the National Assembly in 2006 to close up existing gaps in the NDIC Act 16 of 1996.
When another crisis reared its head in the banks in 2009 the NDIC was far more ready to deal with it then, particularly with the innovative bridge banking model. The government bridge banks replaced the failed banks and their owners, and made it possible for the affected bank workers to keep their jobs, and more importantly, the customers to keep their money. Despite the extent of the crisis, no depositor lost a kobo in the failed banks. In fact, compared to past banking crisis when depositors grieved as they lost funds and the issue became a talk of the town at homes, offices and elsewhere, this time the crisis almost passed unnoticed by the general populace.
 It was after the resolution of the recent crisis that NDIC, in keeping with time-honoured tradition, took stock and went back to the National Assembly to ask for another review of its laws. What parts of the Enabling Act the NDIC requested the National Assembly to review and what additional powers it needed has already been widely reported, and need not be repeated here. Take away all the legal and finance jargons, the NDIC is simply requesting for additional teeth to its supervisory and regulatory powers so as to empower it pay depositors in good time when their monies are trapped in failed banks.
Personally as a keen viewer of the financial arena, I marvel at the degree of deterioration in the relationship between the CBN and one of its key allies. The relationship has always been close, and symbiotic in many respects.  When the NDIC was created in 1989, its pioneer Chairman of Board was the Governor of CBN, late Abdulkadir Ahmed, while the first ever Managing Director, late John Ebhodaghe, was also a staff of CBN. The duo worked hand in hand to fashion out one of the finest professional outfit we have in the country today.
 After ten glorious years in the saddle, Ebhodaghe handed over the baton to Ganiyu Ogunleye, another CBN old timer. Ganiyu Ogunleye actually started his working career in the CBN, where he worked in various departments before landing in the Banking Supervision Department. He was destined to spend eighteen years in the department, seven as its Director and leading light. After spending twenty five years in the CBN, the major portion of these years spent leading the teams engaged in the delicate tasks of handling banking license applications, examining the banks and supervising them, he was appointed Managing Director NDIC in 1999. When he retired in 2010, he wrote a book, ‘Perspectives on the Nigerian financial safety-net’, which is good reading for anyone interested in the current issues associated with financial nets.
 Ogunleye was succeeded as managing director in 2010 by Umaru Ibrahim, who has been has been a foundation staff of the corporation, having joined in 1989 in the first wave of recruitment of senior officers. He was brought out from Kano State civil service where he had a distinguished career, rising from the post of assistant secretary to become a permanent secretary within a period of less than ten years. He arrived at NDIC richly adorned with public service laurels, having headed key departments in the Kano State governor’s office. At the NDIC, Umaru Ibrahim was rigorously groomed over the years under the direct tutelage of these aforementioned outstanding public servants. He served in many key departments of the NDIC as Director, then, he became an Executive Director. By the time he became the managing director, he was for all practical purposes the first home-grown chief executive of the corporation.
Besides the close relation-ship at the top level, the CBN has always been an influential member of the NDIC board, first at inception as chairman, then after 1996, as a member to date. Then one fails to understand why we have this public misunderstanding on a crucial matter, particularly to the depositor, that should have been sorted out at the Board level or between the two chief executives of CBN and NDIC, who should always be on speaking terms. However, one is encouraged by the conciliatory tone of the managing director, NDIC, at the Senate chambers where he said, ‘we are for collaboration; we are for the safety and soundness of the system. We are not competing with the CBN. All we are asking is additional powers to work effectively’. I hope the CBN top hierarchy will reciprocate this gesture and help to push for these changes in the NDIC Act which is for the good of the banks and depositors alike.

Dori can be reached at [email protected] <http://webmail.dailytrust.com/cpsess7044168411/3rd party/squirrelmail/src/compose.php?send_to=gambodori%40yahoo.com>>