Why Nigeria’s financial system is stable despite challenges — NDIC
Nigeria’s financial system has remained stable and resilient in spite of the macroeconomic shock and stress brought about by COVID-19 because of the proactive policies, supervision and support of the regulatory authorities.
The Managing Director/Chief Executive of the Nigeria Deposit Insurance Corporation (NDIC), Bello Hassan, disclosed this at the opening of a 3-day retreat organised by the corporation for members of the House of
Representatives Committee on Insurance and Actuarial Matters in Lagos.
He noted that the sustainable growth of any economy whether developing or developed would largely depend on the resilience and stability of its financial sector. He added that financial stability is about the resilience of the financial system to stress, macroeconomic shocks, or problems at a specific institution or market, from disrupting the broader financial system.
“The macroeconomic shock and stress brought about by COVID-19 are unprecedented.
It has been recognised as the ultimate test of resilience so far to financial systems. As evidenced by the financial soundness indicators, Nigerian banks have remained resilient, by being safe, stable and sound in spite of the challenges posed by the COVID-19 pandemic. This success was due largely to the proactive policies and support of the regulatory authorities,” he said
He listed some of the measures taken by NDIC to strengthen the deposit insurance system in the country to include, the migration to the Differential Premium
Assessment System (DPAS) from the flat-rate method of assessing and collecting premiums with a view to aligning the pricing of deposit insurance to the risk profile of individual banks and the collaboration with the Central Bank of Nigeria, CBN to shift from the compliancebased examination to RiskBased Supervision (RBS) and the adherence to corporate governance principles in the banks among others.
He said the NDIC is embarking on robust collaboration and cooperation with relevant stakeholders, other deposit insurance agencies and global bodies, particularly in the area of knowledge and information sharing to effectively address the technological, legal, regulatory, and supervisory challenges facing the deposit insurance system in a rapidly changing environment.
Tasking the lawmakers on appropriate legislation, the MD stressed that the maintenance of financial resilience requires preparation, in advance, through diligent planning, laws, robust policies and sound institutions to implement the laws and policies.
The Chairman, House of Representatives Committee on Insurance and Actuarial Matters, Darlington Nwokocha, said the retreat will help lawmakers to identify legislations to strengthen the NDIC and boost the confidence of the people that their monies are safe.