NDIC: Ibrahim’s Reward for Discipline and Hardwork
My background as Head of Business and Economy Desk of The Guardian and later the Business Editor of THISDAY calls. I still watch the financial space closely and I am often tempted to write Business and Economy. My background was activated last week when President Muhammadu Buhari re-appointed Umaru Ibrahim as the Managing Director/Chief Executive of the Nigeria Deposit Insurance Corporation (NDIC) for tenure of five years. Mr. Ibrahim is a good man, a gentleman.
Insiders say Ibrahim received the reappointment letter on Thursday, December 31st and resumed office yesterday Monday. He had concluded his first tenure of 5 years as the MD on Tuesday, December 8, 2015.
From trends in President Buhari’s recent appointments, at a time he is vigorously fighting an anti-graft war, it is most unlikely that someone with stained hands, or with cupboards stashed with skeletons, would have a tenure renewal so long.
President Buhari watchers also believe that he is uncomfortable with people who play to the gallery or do “eye service”, as they put it.
I have known Ibrahim as a quiet person, who also does his work quietly, and not one to hug the klieglights.
I sampled the opinion of some finance correspondents in Abuja during the week and got sound bites like: “He is good-hearted, meticulous, thorough and hardworking; a gentleman with a high sense of discipline and highly principled.”
NDIC was established under the NDIC Act No.22 of 1988 with the key role of providing financial guarantee to depositors of licensed deposit-taking financial institutions comprising Deposit money Banks, including non-interest banks, microfianace Banks and Primary Mortgage Bank in the unlikely events of failure.
The corporation is responsible for protecting depositors and also promoting public confidence in the money market where trust thereby contributing to the financial system stability in Nigeria.
The effective bank examination undertaken by the NDIC under his watch contributed immensely to the healthy state of the Deposit Money Banks (DMBs) in the country.
Simplified
An official of NDIC broke it all down in a talk to some students: He began by saying: “Some of you may have heard that badly managed banks do fail. And when they fail, what happens to the thousands of people who have kept their money there as deposits?” “Ahhh, trouble!” some students shouted. “Yes, trouble for the depositors and for the industry because banking is based on trust. If banks fail and depositors don’t get part of their money back, people are going to lose confidence in the banks and keep their money under pillows. That is not safe.” “Armed robbers!” some students shouted. “That is where we come in. We provide insurance cover for the depositors of licensed deposit-taking financial institutions; make payment of dividends to uninsured depositors and creditors of failed insured financial institutions; ensure orderly resolution for both troubled and failing insured deposit-taking financial institutions; ensure orderly closure of failed insured financial institutions and prompt payment of insured deposits.”
“We do a lot more,” the NDIC official continued. “We supervise insured deposit taking financial institutions; provide technical and financial assistance to deserving deposit-taking insured financial institutions; and contribute to the formulation and implementation of banking policies.”
Ibrahim’s background and his calm nature fit into the mold of the sensitive position of an NDIC helmsman. The position requires people who are not talkative or flippant persons, and who are not flambouyant.
Background
Umaru Ibrahim, mni, was born in Karaye, Kano State. He graduated from the Ahmadu Bello University, Zaria in 1974. Three years later, in 1977, he added a Master of Public Administration (M.P.A.) to his academic laurels from the same University. In 2001, he attended the prestigious National Institute for Policy and Strategic Studies, Kuru where he graduated in November of the same year.
Ibrahim had a rich work experience since he joined the Kano State Public Service in 1975 after compulsory oneyear National Service. From a relatively junior position of an Administrative Officer in the Cabinet Office of the Kano State Government, he rose to the post of Permanent Secretary within a period of ten years due to hard and diligent work. He served in several Ministries and Departments until 1989 when he joined the NDIC.
He joined the Nigeria Deposit Insurance Corporation in May, 1989 as a Deputy Director and a Departmental Head in charge of Financial and Technical Support, one of the key operational departments of the Corporation then. In 1991, he became a full Director in charge of the Administration Department of the Corporation.
Between 1992 and 2007, he headed several other departments amongst which were the Human Resource and Corporate Development Departments.
Between September, 1995 and September, 1996, he was appointed an Executive Director (Finance and Administration) in the defunct First African Trust Bank and was involved in the restructuring and sale of the bank.
In August, 2007, Alhaji Umaru was appointed the Executive Director of the Corporation in charge of Corporate Services. His responsibilities included General Administration, Human Resource Management, Information Technology and Finance functions. In December, 2009, he was appointed the Acting Managing Director/Chief Executive Officer of the Corporation following the expiration of the term of the erstwhile MD/CEO. He was appointed Managing Director/Chief Executive Officer on the 8th of December, 2010.
Over the years, he has attended several technical and management courses from some prestigious institutions both at the national and international levels. Amongst the main ones are the ESSEC Graduate Business School, France, Templeton College of Oxford University, U.K. and International Centre for Banking and Financial Services, Manchester University.
Others include Royal Institute of Public Administration, London; International Institute for Management Development (IMD), Lausanne, Switzerland; INSEAD France, ROSS School of Business, University of Michigan USA, University of Cranfield UK and the highly prestigious National Institute for Policy and Strategic Studies. He is a member of several professional bodies.
Performance: Ibrahim performance must have added to his advantage. Talking money in terms of the audited financial statements for the year ended 31 December 2014. The NDIC continued to prepare its financial statements on the basis of International Financial Reporting Standard (IFRS) and in line with the requirements of the Financial Reporting Council of Nigeria (FRCN).
The Total Operating Income of the NDIC increased by 28.73% from ₦ 66.94 billion as at 31st December, 2013 to ₦ 86.17 billion as at 31st December, 2014. Total Operating Expenses increased by 22.77% from ₦ 24.73 billion as at 31st December, 2013 to ₦ 30.36 billion as at 31st December, 2014.
The net surplus of operating income over operating expenses for 2014 and deposit insurance fund stood at ₦ 138.81 billion as against ₦ 114.18 billion in 2013, after remittance of ₦ 15.38 billion to the FGN Consolidated Revenue Fund Account.
But for a deposit insurance corporation, success is also measured in how threats to depositors’ funds are handled. Ibrahim has set policies for deposit money banks in Nigeria, including non-interest bank, micro-finance banks and primary mortgage banks.
Distress Resolution: The Corporation adopted various options in resolving the failures of the 48 DMBs, 186 MFBs and 25 PMBs that had failed in the past 25 years. The options employed however depended on the peculiarity of the problems of the insured institutions. They ranged from Open Bank Assistance to Deposit Pay-out, Purchase and Assumption, and Bridge Bank.
One of the landmark achievements in distress resolution was the institution of a framework for the provision of financial and technical assistance to deserving insured institutions to alleviate the liquidity challenges being faced by MFBs and PMBs. The framework was fine tuned in 2014 and the sum of ₦ 16 billion was set aside for eligible insured institutions to access.
Establishment of bridge banks: Memories of Nigerians are still fresh to the Bridge Bank option of failure resolution which was the latest approach adopted by the NDIC. The option was adopted in the interest of depositors and to prevent outright liquidation which would have had severe consequences for depositors and other stakeholders of the banks and thus undermining public confidence in the banking system.
Following that decision, three bridge banks namely: Mainstreet Bank Limited, Keystone Bank Limited and Enterprise Bank Limited were established to take-over the assets and assume the liabilities of erstwhile Afribank Plc, Bank PHB Plc and Spring Bank Plc, respectively. The CBN subsequently revoked the operating licences of the three banks (i.e. Afribank Plc, Bank PHB Plc and Spring Bank Plc) on August 5, 2011.
The Bridge Bank mechanism had a salutary effect on the banking system as it preserved and sustained operations of the three banks in all their branches and allowed over 3.7 million depositors to continue to enjoy banking services in the premises of the affected banks and over 6,000 jobs were saved in the banking system.
Payment of Insured Deposits and Liquidation Dividends: As at September 30, 2014, the NDIC had paid the sum of ₦ 6.825 billion to 528,277 insured depositors of 48 DMBs whose operating licences were revoked. In addition, a cumulative sum of ₦ 93.646 billion had been paid as liquidation dividend to 250,497 depositors as at September 30, 2014. In the same vein, 80,059 verified depositors of 186 MFBs in-liquidation had been paid a cumulative amount of ₦ 2.756 billion as at September 30, 2014 following the revocation of the banks’ operating licences in 2010 and 2003.
Those are only some of Ibrahim’s achievements. Luckily for him, the money market and the country, at large, he has only one way to go in the next five years – to take the NDIC to the next level.
The Bridge Bank mechanism had a salutary effect on the banking system as it preserved and sustained operations of the three banks in all their branches and allowed over 3.7 million depositors to continue to enjoy banking services in the premises of the affected banks and over 6,000 jobs were saved in the banking system