The Managing Director, Nigeria Deposit Insurance Corporation (NDIC), Umaru Ibrahim, has called on African countries to strengthen their Deposit Insurance Systems (DIS) to promote financial stability in the continent.
Ibrahim, in his welcome address at the International Association of Deposit Insurers (IADI) Africa regional Committee (ARC) workshop in Lagos, last week, pointed out that the recent global financial crisis underscores the importance of DIS in maintaining stability and confidence in the financial system, stressing that the crisis was a wake-up call for African countries with existing DIS to carry out comprehensive review while others that have none to put one in place.
He explained that the system in use in Nigeria, commonly regarded as ‘explicit type’, is risk minimize, with broad mandate of deposit guarantee, supervision, distress resolution and liquidation, stating that it had helped to stabilise the financial sector.
Also speaking at the event, Chairman, IADI Africa Regional Committee, John Chikura, said globally, deposit insurance had become an integral part of the financial safety net, stating that despite their varied mandates, deposit insurers contributed to the overall growth of the economy.
Chikura, who is also the Chief Executive Officer of the Deposit Protection Corporation, Zimbabwe, noted that the choice of the theme, ”Deposit insurance systems and designs” was a way to make the deposit insurance scheme contribute more to financial stability on the continent.
He advised African countries to adopt the explicit deposit insurance model, stressing that “the global financial crisis raised recognition of the value of deposit insurance and now might be the right time for the majority of African countries to come on board and adopt explicit deposit insurance schemes.”