NDIC: Farewell To Iconic MD
By Salisu Na’inna Dambatta
The Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, an alumni of the Nigeria Institute for Policy and Strategic Studies, has retired from the Corporation on December 7th, 2020, after serving for 31 years, ten of them as the Chief Executive Officer.
It is pertinent to remind Nigerians that the NDIC was established in 1988 to protect depositors’ monies in the financial services industry in the event of a financial crisis, or the failure of any financial institution. It came in response to the catastrophic failure of several banks in the country.
Alhaji Umaru Ibrahim, a holder of a bachelor’s and master’s degrees from the prestigious Ahmadu Bello University, Zaria, joined the NDIC in 1989 barely a year after its establishment. He was therefore part of the team that nurtured the institution from its early days to its current status of a colossus. In recognition of his capacity for hard work and commitment to building the NDIC as an important institution that builds confidence in the financial sercices industry, he was appointed acting Managing Director in December 2009, and ultimately, the substantive Managing Director on December 8th, 2010.
Under his stewardship, the NDIC grew into a reliable insurer of deposits in financial houses to the extent of virtually erasing the fear of 100 per cent loss of deposits in banks by Nigerians, thousands of them bitter victims, or friends of individual and corporate bodies, that lost their hard-earned monies to ruined, failed or looted banks, prior to the establishment of the NDIC.
His achiements at the helm of the corporation include building the human capital of the corporation to a very high standard of professionalism. This made the staff of the organisation fully motivated, committed and dedicated in their roles, which in turn ensured the sustainable achievemens of the organisation goals.
His leadership in overseeing the Corporation’ effective failure resolution strategy in the banking sector, which saved countless depositors from losing their funds, and deftly guiding the Corporation’s growth to take its rightful position as the Chair of the African Regional Committee of the International Association of Deposit Insurers (IADI), have made Alhaji Umaru Ibrahim a remarkable pace-setter in the history of public-sector corporate management in our country.
Dr. Mahmoud Isa-Dutse, the recently-retired Permanent Secretary in the Federal Ministry of Finance said under the hands of Alhaji Umaru Ibrahim “the Corporation was outstanding in the implementation of its mandate towards contributing to the stability of the financial system.”
He recalled that when he was the Permanent Secretary in the Ministry of Finance, the NDIC was the most compliant in the practice of Corporate Governance. The NDIC was equally excellent in service delivery. Other sister agencies were, contrary to the example of the NDIC, “constantly grappling with numerous internal disputes and challenges.”
The role of the NDIC in protecting deposits is so perversive as indicated in one of its recent report which explains that it covers “all deposit-taking financial institutions licensed by the CBN, which include Deposit Money Banks (DMBs), Microfinance Banks (MFBs), Primary Mortgage Banks (PMBs), Non-Interest Banks (NIBs) and subscribers of Mobile Money Operators (MMOs). Accordingly, the NDIC, currently provides Deposit Insurance cover to 27 DMBs, 918 MFBs, 34 PMBs and 2 (Two) NIBs.”
The large number and type of financial institutions covered by the NDIC reflects the growth of the financial sercices sector over the years. As the sector grew and evolved, the NDIC was proactively doing the same. Even the initial N50, 000 compensation for insured deposits rose to N500, 000, or grew tenfold.
During the 30th Anniversary of the NDIC, Alhaji Umaru reported that cumulatively “the NDIC has paid over ₦8.25 billion as insured amount to 442,999 depositors of closed DMBs; paid over ₦2.97 billion to 83,415 depositors of closed MFBs, and over ₦70.53 million was paid to 869 depositors of closed PMBs.”
Without the insurance coverage, those 442, 999 depositors would have been financially ruined by losing N8.25 billon; those 83,415 depoitors of shuttered Micro Finance Banks would have missed the N2.95 billion paid to them by the NDIC while 869 customers of bankrupted Primary Mortgage Banks would have lost the N70. 53 million they got from the NDIC.
The fact that those depositors were largely the breadwinners for families and job-creators in the country, means that livelihoods were protected and the affected citizens saved from potential penury and all the pains that come with it. In my view, this should be counted as one of the major achievements of the NDIC while Alhaji Umaru Ibrahim was the Managing Director.
In terms of failures resolution mechanism, the NDIC had adopted several resolution options to manage failures in the system.
An entry on the NDIC website dated 2019 says, “The options range from Open Bank Assistance (OBA), Purchase and assumption (P & A), Bridge Bank, and reimbursement (payout) of Insured Depositors. The NDIC used Purchase and Assumption (P & A) to resolve problems of 13 banks closed by the CBN in 2006 as a result of their inability to meet the Consolidation/Recapitalization requirement of N25 billion. The P&A option was adopted by the Corporation to resolve the problems of banks affected by the Global Financial Crisis of 2009, which manifested in poor Asset Quality and Weak Risk Management, as well as weaknesses in Corporate Governance.”
“Furthermore, in the discharge of its statutory role under Section 39 (i) of the NDIC Act 16 of 2006 and in consultation with the CBN, the Corporation adopted the Bridge Bank mechanism to resolve the failure of three (3) DMBs namely Afribank, Spring Bank and BankPHB in 2011. Similarly, in 2018, that mechanism was used to resolve the failure of Skye Bank Plc. Indeed, the merits of the bridge bank to the nation’s economy are numerous,” the report affirmed.
According to the report, “the bridge bank initiative safeguarded 12,667 jobs, protected deposit liabilities of over ₦1.759 trillion which ensured that depositors had uninterrupted access to their funds, and prevented the systemic repercussions of the failure of the bank on the entire financial system. The Bridge bank option engendered macro-economic stability, sustained daily operations of the failed banks including meeting maturing obligations and enhanced the confidence of Depositors and other Stakeholders.” This is an important achievement.
Under his watch, working with the Central Bank of Nigeria, the NDIC designed policies to deepen the capacity of the organisation to protect insured deposits. The proactive measures included the “Adoption of Risk-Based Supervision Framework; Development of Framework for Early Warning Signals to detect problem banks; Development of Framework for the Identification and measurement of Systemically Important Banks (SIBs) and the Articulation of a Framework for the Provision of Financial and Technical Assistance to deserving Insured Institutions.”
The innovations he introduced to the NDIC and the achievements recorded in the decade he was at the helm of the corporation are too numerous to narrate here. His consistency in the training of members of the Finance Correspondents Association of Nigeria (FICAN) to sharpen their specialism and hosting the NDIC Editors Forum where editors are given deep insights into the operations of the NDIC, have set him and NDIC aside in terms of engaging the media in creating awareness in the citizenry.
The new Head Office for the corporation which is under construction, is one of the concrete and enduring legacies Alhaji Umaru Ibrahim is leaving as evidence of his iconic tenure at the NDIC.
Salisu Dambatta writes from Kano