Why Umaru Ibrahim will outperform himself the second time around
If the right mix of acumen and economic upturn is what Umaru Ibrahim needs to outperform his first tenure as Managing Director of Nigeria Deposit Insurance Corporation (NDIC), then both ingredients are readily available. The first of them—acumen— he garnered over the years at the very institution he now heads. The second comes from his involvement in the articulation of the unfolding economic road map of the Federal Government.
The Buhari administration is doing all it can to attract investors through bilateral agreements initiated in the many foreign trips by the President and through policy shifts, the latest being the removal of oil subsidy. The war on corruption is an essential, though hazardous, confidence building measure to further assure investors that they can do business with us.
Look all around our financial regulatory institutions and you will see these confidence building measures playing out. CBN is cooperating with EFCC to ensure that our banks are safe for our deposits. SEC is working to achieve 100 per cent dematerialisation of shares in compliance with global practices and as a means of encouraging faster and simpler transaction of shares by retail investors. AMCON is busy buying up non-performing loans to stabilise our banking sector.
All these tributaries will feed the main river of our economic recovery and NDIC will be there to ensure risk minimisation in all that our money deposit banks are doing. But that would need a good management with a sharp shooter at its helms and that is how Umaru Ibrahim’s wealth of experience will come to play.
An analyst, Olutola Oni, head of research at invest¬ment firm, WSTC Financial Services Limited, sums up Ibrahim’s first tenure in these words: “A critical achievement of the corporation in the past 5 years has been in re¬spect to the restoration of confidence in the banking system through effective col¬laboration with the CBN and the distressed banks which evolved from the last bank¬ing crisis,”.
The major challenges facing our national economy are the combinations of global uncertainties, low oil price—our major forex earner—and slowing GDP growth. Add this to the constant evolution of our banking system fuelled by ICT and emergence of mobile banking and all its attendant risks. These are challenges that Umaru and his team will have to contend with in their regulation of the deposit money banks (DMBs) as he settles for his second term. All he needs to do is to stay vigilant and ahead of the curve and keep communication channels open with the market. Forward thinking is what distinguishes CEOs of Umaru’s calibre from other leaders. And Umaru has, on many occasions in the past, proven that he possesses that attribute. The bridge banking solution proffered when some distressed banks threatened the banking system in Nigeria some years back is a very good example.
The bridge banking resolution strategy, the first of its kind in Nigeria, did not only revealthe forward thinking in Umaru but also his intrepidity—his ability to perform effectively in complex and difficult circumstances.
Effective communication and a persuasive disposition are some of the traits of the NDIC’s Managing Director/CEO. His ability to achieve results through others—NDIC’s partner regulatory bodies like CBN and SEC—is a testimony of his team building pedigree. The establishment of Asset Management Corporation of Nigeria (AMCON) is the kind of results achieved by NDIC in collaboration with other critical stakeholders.
Malam Umaru Ibrahim has the rare advantage of being an insider, a long standing family member of the NDIC having been with the institution from its beginning and rising through the ranks to the pinnacle of its management position.
But more than these traits and home advantages, Umaru will need modern tools to be effective. And this is where his effort to get the NDIC’s Act of 2006 amended during his first tenure will come to focus in his current term. With that amendment NDIC will achieve more than it was able to achieve hitherto.
To appreciate the magnitude of what NDIC is managing, one needs to look at the figures. As of the end of 2013, our total banking assets was equivalent to N22.08 trillion ($110 bil¬lion), making Nigeria the largest financial system in Sub – Sahara Africa, outside South Africa. Because the premiums for NDIC deposit insurance are tied to risk, it is only reasonable for the agency to align its assessments through increased regulation as banks’ financial complexity grows. The amendments that NDIC is seeking are not out of place, but are meant to equip the agency with adequate tools to handle effectively any future crises.
The NDIC has sought an amendment to its Act of 2006 which does not now give it the powers to independently supervise and liquidate failing banks.
Other powers sought by NDIC include the power to license banks; the power to determine the licences of banks; and the power to appoint itself as liquidator of ailing banks, among others.
The political atmosphere is such that there are good chances that NDIC will see its request for amendment through this time around. Getting the right tools to work efficiently is the highest manifestation of the wisdom of the MD.
Nigeria’s economy will rebound. In its 2016-2016 forecast of Nigeria’s economy, PwC, a global financial analyst, has this to say:
“We expect that the Nigerian economy will continue to grow, even if oil prices fall to $35/bbl and average just $45/bbl this year. A large services and agriculture sector has developed independently of the oil sector, and this should help to insulate the real economy from a downturn in oil prices.”
The security situation that has always had the potential to unnerve investors is being brought under control with the dismantling of the Boko Haram terror infrastructure. The noise coming from the Niger Delta could be contained with appropriate engagement.
With the signing of the N6.06-trillion budget, the highest in Nigeria’s history, the Federal Government has decided to borrow to maintain expenditure level. Most of the borrowings as contained in the budget are tied to capital projects from external sources, including the China Exim bank. On the other hand, the CBN has been trying to maintain a balance between drawing down remaining foreign reserves to defend the exchange rate and accepting a weaker exchange rate. CBN is in this delicate balancing act with the aim of avoiding a runaway inflation.
No doubt, there are concerted efforts by Government and its agencies to rejuvenate the economy. Therefore, if all went well on the economy side and the National Assembly sees the wisdom of protecting the depositors’ more by putting more powers in the hand of NDIC, the second term of Malam Umaru Ibrahim looks set to outshinehis first.
The man has enough wealth of experience up his sleeves.
Bashir I. Hassan