A renewed but veiled orchestrated attack on the Central Bank of Nigeria(CBN) by the Nigeria Deposit Insurance Corporation (NDIC) in some national dailies got this writer worried as a concerned financial analyst and a stakeholder in the Nigeria financial landscape. One has refused to contribute to the on-going open assault and blind ambitious desire of the Corporation to usurp powers of the monetary authority having read some informative and didactic submissions made by critical stakeholders on the needless ambition of the NDIC.
But recent onslaught by the Corporation in a syndicated article in some newspapers against the CBN entitled: ‘Nigeria’s economy through NDIC’s stethoscope’ leaves much to be desired. It whipped up undue sentiment to once again confuse the public having agreed with the apex bank as advised by ‘fathers’ of the industry urging the two institutions to work together. It was an open knowledge that the Corporation had wanted to use the last administration to usurp the powers of the CBN through the amendments it sought but was gravely disappointed with the deluge of opposition to its ambition as it will not augur well for the sector. Commentators, in agreement with credible stakeholders in the sector, have advised the Corporation on the futility of its venture, and thus, urged it to strengthen its collaboration with the apex bank by seeking stronger legislation to enhance its mandate rather than asking for powers it cannot have nor possess the capacity to use.
Can a creation of the apex bank, be bigger than it? “No matter how grown a child becomes, even in material wealth, he cannot boast of enough rags as his father”, so says a popular Yoruba adage. This ensuingdrama by the Corporation started when it sought an amendment to its 2006 Act. Some of the current henchmen of the Corporation, who wereappointed from within the establishment and worked with several managing directors from Mr. Ebodaghe of blessed memory’s era to Mr. Ganiyu Ogunleye know the genesis of the Corporation’s creation and operations. It became a surprise therefore that the Corporation, under thewatchful eyes of these men of integrity embarked on this line of action. It leaves one bewildered, and ask what they really want? Were theirforebearers at the Corporation seen as unwise to have worked harmoniously with the apex bank before now?
More so, the Corporation has canvassed by stakeholders on the ongoing debate lacks the resources and capacity to use the power it seeks. Why the adventure? It is not a doubt, that, the Corporation has performed creditably in the last decade and this was not without the support and collaboration of the CBN. NDIC for the purpose of clarification and education of the public came into existence on the recommendation ofMr. Ola Vincent, former Governor of the CBN in 1988 ostensibly to assist the apex bank in strengthening the safety net of the then liberalized banking sector, and later became a parastatal in the Federal Ministry of Finance. This does not make it an equal with the CBN. Mainly, the Corporation was saddled with the responsibility of protecting the banking system from instability occasioned by runs and loss of depositors’ confidence in collaboration with the CBN.
If its recorded successes are responsible for these powers being solicited,were they by the Corporation alone or with the collaborative effort of the CBN as the sole regulator of the country’s monetary policy? The Act that established it in 1998, though later amended in 2006 for effective performance, has been working for it perfectly in fulfillment of its mandate; it thus became a puzzle when the corporation chose to seek an amendment to the Act. Some of the powers the Corporation is seeking are: power to license banks, (a prerogative of the Central Bank of Nigeria), power to supervise banks without reference to the apex bank, power to determine licenses of banks, and power to appoint itself as liquidator. Some of these are encroachment on the mandate of the apex bank. Rather than strive to strengthen the collaboration, the NDIC seeks to equate itself with the CBN. An aberration! Worldwide, Central Banks are the sole monetary authority saddled with monetary policies and regulation. Surprisingly, and after 25 years of establishing NDIC, the Corporation believes it has grown up to challenge the authority of his father, CBN. What an ungrateful child!
Duplicating powers between two agencies that had hitherto been working harmoniously is not good for the system; rather, their collaboration should be strengthened for a stronger and healthy financial system than causing these unnecessary hiccups as sought by NDIC. As advised by the founding fathers of the Corporation and well-meaning technocrats in the industry before the 7th National Assembly wound down, the Corporation was urged to collaborate with the CBN rather than seeking powers it does not have the capacity to use, neither can the CBN do it all alone without the support of complementary agencies. As a follower of this development, I reliably gathered that the two agencieswrote a letter, jointly signed by its Managing Director and the Governor of the Central Bank to the former 7th Senate Committee Chairman on Banking, Insurance and Other Financial Institutions, Senator Bassey Edet Otu and agreed to sheathe the sword by allowing elders of the industry to intervene and work out better and more collaborativeinitiatives for the health of the sector.
When this was agreed, why is the Corporation reneging on this term toembark on renewing the ‘war’, veiling the exposition of its 2014 annual report to the public to reopen the ‘craze’ for the sought amendment.
In the said article, the corporation whipped up unwarranted sentiments saying that “The barely two-month old administration of President Mohammadu Buhari is likely to welcome the report for the assurance that the administration has not much to worry about in the fundamentals…so he’ll be able to concentrate his energies on tackling corruption and other financial crimes”. It did not stop there; it made a passionate appeal to the President to give special attention to cyber variant of financial crime which reared its ugly head in the banking industry between 2013/2014 and through which about N6.2billion of depositors fund were lost. This is as if the CBN is not doing anything about cyber-crime. This is utter mischief.
The CBN on noticing the growing menace of cyber-crimes in the country directed all banks and financial institutions in the country in a letter dated October 2, 2013 to report suspicious transactions (STRs) and currency transactions (CTRs) to the Economic Financial Crimes Commission (EFCC) and Nigeria Financial Intelligence Unit (NFIU)instead of the Bank as it hitherto obtained. To also stem the menace I am aware that, the CBN is collaborating with the West African anti-money laundering and counter-financing terrorism, GIABA. If the Corporationis indeed concerned about strengthening the sector, syndicating damaging articles in the media rather than jaw-jaw with the CBN is a wrong approach.
From all indications and facts available to the public, the CBN was never against the desire of the NDIC to urgently pay depositors of distressed institutions in good time, but it is against the proposal of theNDIC to be a judge and juror in cases involving banks that are fraught with dangers. Agreeing to this is a recipe for DANGER and financial instability. The harmony that hitherto existed was never hurt, why seek an amendment, if not for mischief. What the Corporation, in my view,should have done is to seek the support of the CBN and other relevant agencies to make a STRONGER appeal to the legislature for a FIRMERlegislation against arbitrary manipulation of court process by defaulters.
While founding fathers of the corporation and well- meaning financial technocrats are busy fashioning a worthy means of enhanced collaboration for the healthiness of the sector, the NDIC with this is latest move is not only undermining the CBN, disrespecting the elders ofthe sector, but totally on a tragic mission for reasons better known to the managers of the corporation.
A few words are enough for the Corporation. A rethink of this misadventure is a panacea against instability in the sector. Its renewed and recent activities in the media are nothing short of a behavior of “an ungrateful child”, who would not have been in existence if not by the grace of the father.
Danladi Musa wrote in from Kaduna
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