Finance minister links GDP growth to collaboration with NDIC, CBN

Zainab Shamsuna Ahmed, minister of finance, budget and national planning on Tuesday said the ministry’s reforms in collaboration with the Central Bank of Nigeria (CBN), and the Nigeria Deposit Insurance Corporation (NDIC) and other agencies, are the reason the country’s Gross Domestic Product (GDP) rose to 3.54 percent year-on-year in the second quarter of 2022.

She said this at the ongoing International Association of Deposit Insurers (IADI) Africa Regional Committee (ARC) workshop organised by the NDIC in Abuja.

The economy’s growth marks the seventh consecutive quarter of GDP growth, since the recession recorded in the third quarter (Q3) of 2020, she said, adding that the Nigerian economy has so far shown signs of resilience in the face of economic headwinds like the conflict between Russia and Ukraine, which affected the global economy.

“The ministry under my watch has implemented a set of difficult but necessary reforms as well as successfully engaged international partners to help the country navigate an extremely challenging economic environment,” Ahmed said.

She noted that the success recorded by NDIC can be attributed to the effective collaboration with other safety-net participants in Nigeria, particularly the CBN, the ministry of finance and other members of the Financial Services Regulation Coordinating Committee (FSRCC).

Ronke Sokefun, NDIC’s board chairman, said although the Nigerian banking system has shown resilience despite the challenges posed by the pandemic, the operating conditions for businesses are becoming more challenging as a consequence of the Russia-Ukraine war.

Read also: IMF approves $258bn financing to 93 countries

Notwithstanding these developments, she said the Nigerian banking system remained healthy overall as the capitalisation level is above the prudential requirement and the non-performing loans ratio is also within the requirement at the end of second quarter 2022.

“It is noteworthy that the NDIC has for a long time since its establishment in 1988 collaborated with other international standard-setters and deposit insurers,” she said.

In his welcome address, Bello Hassan managing director/CEO, NDIC, noted that both the 2007 – 09 global financial crisis and the COVID-19 pandemic exposed the increasing relevance of deposit insurance in stabilising turbulent banking systems and as a buffer for financial system stability.

He said the IADI, which commenced with 25 members in May 2002, has 92 members as at July 2022, excluding Associates, Observers and Partners. “Its mission is “to contribute to the enhancement of deposit insurance effectiveness by promoting guidance and international cooperation” while its vision is to “share deposit insurance expertise with the world”. It has recorded tremendous achievements in enhancing global financial system stability and strengthening financial safety net mechanisms. The ARC of the IADI, established and formed under the auspices of IADI in 2002, currently has 12 members and five associates.”

As a risk minimizer, he said the NDIC continues to enjoy close collaboration with other safety net participants in the financial sector, especially the CBN.

In Nigeria, he noted that the NDIC provides deposit insurance protection to depositors of: 33 Deposit Money Banks (DMBs) which are made up of 24 commercial banks, six merchant banks and three Non-Interest Banks (NIBs); 882 Microfinance Banks (MFBs); 34 Primary Mortgage Banks (PMBs); three Payment Service Banks (PSBs); and 29 Mobile Money Schemes.