Dr Zainab Ahmed, the Minister of Finance, Budget and National Planning says depositors’ protection is a critical element for maintaining and restoring financial stability in Nigeria.
Ahmed said this at the 2022 International Association of Deposit Insurers (IADI) Africa Regional Committee (ARC) workshop hosted by the Nigeria Deposit Insurance Corporation (NDIC) in Abuja on Tuesday.
She said the country’s economy had felt the brunt of the global economic distortion, having gone into recession twice in the space of five years.
According to her, we make bold to say that in spite these economic challenges, no depositors’ fund was lost given the effectiveness of our agencies, especially the Central Bank of Nigeria (CBN) and NDIC.
Ahmed said the theme of the workshop ‘Normality in Turbulent Periods: The Stabilising Role of Deposit Insurance’, was pertinent due to recent socio-economic challenges that had continued to undermine the safety and stability of the financial system.
“The negative impact of these challenges on economic growth and financial sector stability raised a number of questions concerning the role of Deposit Insurance System (DIS) in contributing to financial system stability.
“It has equally demonstrated the important role played by the DIS, as a component of financial safety-net arrangements in most jurisdictions across the globe.
“Depositor protection is a critical element necessary for maintaining and restoring financial stability,’’ she said.
The CBN Governor, Mr Godwin Emefiele, said the secret to the sustained financial stability in the country was the smooth coordination among these safety net participants like the NDIC and others.
Emefiele said the rapid evolution of financial technologies had continued to alter the financial landscape across the globe.
“This development has continued to disrupt traditional ways of financial services banking landscape and this can be sometimes disturbing.
“That is why we the regulator must guard our loins to ensure that we put in place strong regulations, framework and practices that should help nip in the board unfortunate incidences,’’ he said.
Emefiele charged IADI to increase its advocacy to other African countries to ensure effective financial system stability in the continent.
Mr Bello Hassan, the Managing Director of NDIC, said the 2007 to 2009 global financial crisis and the COVID-19 pandemic exposed the increasing relevance of deposit insurance in stabilising turbulent banking systems.
He said the crises led to review of some of design features of explicit deposit insurance system in many countries to accommodate emerging developments in the domestic and global financial system.
Hassan said the workshop created a veritable platform for knowledge and experience-sharing in fulfilling the vision and mission of IADI.
“I am optimistic that at the end of this workshop, strategies for system-wide crisis preparedness and resolution options in promoting financial stability in the region would emerge.
“The NDIC as one of the resolution authorities in Nigeria has adopted different resolution mechanisms in resolving the failure of distressed deposit-taking financial institutions in the country,’’ he said.
Mr Mohamud Mohamud, the IADI-ARC Chairman, urged African countries to be at the fore-front of embracing financial technology.
Mohamud re-emphasised that deposit insurance was a key component of ensuring financial system stability.
Mr David Walker, the Secretary-General of IADI, called on deposit insurers to focus on emerging risks and make their cooperative window active.
The four-day workshop attracted managers of various deposit insurance agencies from different IADI member countries.
