• Security analyst, Olopade, advises Tinubu on economic reforms
By Christopher Oji
Security analyst, Abiodun Olopade, has called on the Federal Government to review the Nigeria Deposit Insurance Corporation (NDIC) Act, 2023. He also wants President Bola Tinubu to implement other reforms to boost financial stability and economic growth of the country.
He told Daily Sun: “Some vested interests want the financial sector and certain institutions under their control. He said some sinister forces had a field day in the immediate past administration. There are proofs of unthinkable, heinous actions perpetrated by those who were later known as the ‘cabal.’
“Unfortunately, the Central Bank of Nigeria (CBN) leadership played a pivotal role. This became evident in the build-up to the 2023 general elections, when the CBN introduced currency redesign.”
In his view, the NDIC Act was an important document overlooked by many stakeholders in and outside government: “This created room for the manipulation of the Act. One of the first and loudest voices to draw the attention of Nigerians to the pitfalls in the NDIC Act was former Lagos State Commissioner for Home Affairs, Abdulhakeem Abdullateef.
“Although he was then newly appointed board chairman of the NDIC, he vehemently protested to Tinubu in his viral video on X. He implored him to probe the hurriedly passed law by the erstwhile administration.”
Olopade was of the opinion that the NDIC Deposit Insurance Fund was the target: “They wanted to appropriate the funds, hence the move to tamper with the provisions of the Act. The new Act falls short of the standards stipulated by the International Association of Deposit Insurers (IADI) for the NDIC’s independence and establishment of corporate governance principles.
“Another worrying aspect of the manipulated Act is that the President’s powers to appoint the members of the board of the corporation were eroded. The CBN now has the right to nominate four of the seven directors and just one of the seven directors is independent. This is contrary to the previous situation, where seven out of 12 were independent.
“The NDIC is an independent agency created to protect depositors, promote monetary stability and encourage competition and innovation in the banking sector through supervision of banks. It advises the CBN in the liquidation of distressed banks and manages assets of distressed banks until they are fully liquidated.”
Olopade said “stakeholders are, however, unanimous in their agitation that the 35 sections infused into the law and assented to by Buhari, will impede the NDIC’s ability to dispassionately carry out its responsibilities. The process leading to the amendment of the NDIC Act, 2006, started after the peer review assessment of IADI in 2011. Then it was recommended that there was a need for more operational independence for the corporation as a safety-net agency.”
He alleged that “rather than work to achieve the 2011 IADI recommendations, the NDIC Act version sent to the National Assembly purportedly drafted by the CBN.
“They drafted in a senior legal staff from the CBN who was converted to a substantive staff (director) in NDIC’s legal department. With the law now assented to, the apex bank arrogated to itself the power to licence, supervise and grant forbearance to banks, withdraw their licence, sanction them and order their liquidation.
“It was widely suspected that the entire process was completed while the NDIC board was not in place.” The 2019 board’s tenure ended on December 8, 2022. He insisted: “From that point, the process was shrouded in secrecy.”
Olopade again quoted Abdullateef: “This is the purported new act of the NDIC. They have taken away the powers of the President in respect of the NDIC. This Act was taken to former President Buhari 48 hours to his leaving office. They knew at that time that the man was so busy and would not be able to read everything they put here. Therefore, they got him to sign it.”
Abdullateef alleged that the document that the departing President signed was materially different from the votes and proceedings of the National Assembly that passed it. He was miffed that those behind these actions designed the Act to ensure that the body was not able to perform its functions as effectively as it should:
“No sooner were we appointed by the President, waiting for confirmation, than they quickly introduced a new bill – a law that would truncate everything that we wanted to do. I participated in the National Assembly as a lawmaker.
“I knew that whatever was passed by the National Assembly and assented to by the President would be what my board would implement. So, I was interested in every detail of what they were passing. What happened (the Act) was completely different from what was passed.
“While the National Assembly passed an Act that would have the representatives of the six geopolitical zones in Nigeria to superintend over the affairs of the NDIC so that it would be able to discharge its duties, it also gave the President free hand to appoint competent Nigerians capable of becoming managing directors and executive directors.
“Those that doctored the document decided to tie the hands of the President by saying that only someone recommended by the CBN governor alone could be the managing director or the executive director. This was in contrast with the previous Act where the President had the freedom to appoint any competent Nigerian to superintend over the affairs of the NDIC.
“They also removed the representatives of the six geopolitical zones. They have made the permanent secretary, who does not have time, to be the chairman of the board. How can a permanent secretary be a judge in his own case? That is the ministry supervising the affairs of NDIC! How can the head of that ministry still be the head of NDIC?
“What they have done here is that no worker, no director in NDIC, can ever progress to become executive director or become the managing director, because they said, even if you work all your years in NDIC, only the CBN can appoint and recommend who should be the executive director or managing director.
“The one that is affecting the depositors is that NDIC will no longer be able to make depositors smile. There were thousands of petitions from Nigerians who are owed by the NDIC, who find it difficult to claim their rights from the NDIC.
“They are frustrated because the NDIC Act has so many useless sections, some that say, ‘If you don’t come and claim your money within a time, the NDIC will become the owner of the money.’ How can you say that a microfinance bank that has closed should get the depositors to come and get their money?
“You say you are using town criers. Town criers in today’s modern Nigeria, when they have phone numbers? You’re denying Nigerians trillions of naira. This law has removed the independence of the NDIC.
“The former law said NDIC shall be free to go and investigate the banks. Now the law says NDIC can only go and investigate banks if CBN approves. Before, once NDIC realises you are supposed to collect your money, NDIC should be able to pay you, free!
“Now there is a section, which says, when the bank suspends payment to you and NDIC is supposed to pay you, NDIC should go and get the approval of CBN before they can pay you. This is corruption! You do not need the approval of the CBN if you say NDIC is an independent agency!”
Olopade called on Tinubu not to act on the law until it is probed: “Probe the passage of this law, probe the inclusion of Section 7, which takes away the right of the Ministry of Finance, which takes away the representatives of the Ministry of Finance and replaces them with two directors from the CBN. Probe why what was passed was fundamentally different from what was assented to. Probe what happened between the time the National Assembly passed it and there was no divergence.
“Under the law, do you know the status of this Act? It is null and void! Any time Mr. President assents to a bill that is materially different from what was passed by the Senate and the House of Representatives, it means there was a material omission, and that law was not mature for assent.
“The law should be returned to the National Assembly so members can debate on it. This, of course, is why President Tinubu cannot feign ignorance of the fraud inherent in the NDIC Act, 2023. Thus, as Nigeria and his administration wage war against corruption, that obnoxious law should be brought down.
“This is not only because it will erode the independence and effectiveness of the corporation, the provisions are also non-compliant with international best practices and negate the core principles of the IADI, to which NDIC is a signatory and a key member.
“The executive and the legislature should work together to produce an Act that would guarantee the NDIC’s independence to ensure the safety, soundness and stability of the banking sector in the country.”