Alhaji Umaru Ibrahim, MD/CEO of the Nigerian Deposit Insurance Corporation (NDIC) sucessfully defended the agencies 2017 proposed budget before the House Committee on Insurace and ctuarial Matters.

Mr. Umaru at the defence restated the Corporations commitment to performance based budgeting system (PBBS) the essence of which is was to ensure efficient allocation of resources to enable the Corporation achieve its strategic mandate. He explained in his presentation that in 2016, the Corporations actual income (net of provisions) was N85.020 billion which was expendable to the limit of 75% in line with the provisions of Fiscal Responsibility Act (FRA) 2007 while its total expenses was N31.551 billion. This gave a net operating surplus of N53.469 billion out of which the Corporation made provision to transfer the sum of N42.775 billion or 80% into Consolidated Revenue Fund (CRF). As at date (Feb 2017), the Corporation had made a total transfer of N35.893 billion into CRF while awaiting the conclusion of its 2016 External Audit report before transferring the outstanding balance of N6.882 billion to the CRF in line with FRA 2007. With this the Corporation had surpassed its budgeted sum of N35.893 billion as against the actual sum of N42.775 billion transferred into CRF.
He urged the House Committee to approve the Corporation’s 2017 proposed budget of total income of N102.294 billion and expendable income of N76.720 billion. This comprised Operating expenses of N43.227 billion or 49.94%of total expenditure and a total Capital expenditure is N43.323 billion or 50.06% of the total budget. The Capital expenditure would be funded by the Corporation’s General Reserve Fund which stood at N45.670 billion as at 31st December, 2016. He concluded that a total of N47.254 billion is proposed as 80% net Operating surplus to be transferred into CRF in 2017.
Members of the Committee expressed their satisfaction with the level of execution of the Corporation’s 2016 Budget and its proposed 2017 Budget especially its commendable efforts by consistently contributing to the Consolidated Revenue Fund of the Federation and urged the Corporation to remain steadfast.

The NDIC boss reveals that while the banking industry indicated strong fundamentals in regulatory assessment and rating, regulators were concerned about the rising tide of NPLs in the banking system. He informed the Honourable members that as at December 2016, the 25 Deposit Money Banks (DMBs) had total loans portfolio of N18.53 trillion out of which N1.85 trillion or 10% were NPLs where N740 billion or 40% constituted Insider/Directors related loans. This was far above regulatory threshold of 5% for the DMBs.
In other banking subsectors like the microfinance banks, (MFBs), he noted that there were 978 MFBs in existence as at December, 2016 with total deposits liabilities of N158 billion and total loans and advances amounting to N195 billion out of which N87.75 billion or 45% were NPLs where N68.25 billion or 35% constituted Insider related/Directors loans.  The NPLs indicated a classic case of over-lending, accumulated interests charges and poor corporate governance.
Similarly, by extension, the existing 42 primary mortgage banks (PMBs) had total deposits liabilities of N69 billion but  with total loans portfolio of N94 billion, which indicated another case of over-lending, accumulated interests, poor corporate governance and high ratio of NPLs which stood at N51.7 billion or 55% out of which N42.3 billion or 45% were Insider related/Directors loans. The resultant effects of these negative trend would be poor earnings and erosion of shareholders fund.

The chairman of the Committee, Hon. Femi Fakeye, commended the Corporation on its performance in the 2016 budget where the NDIC stood out amongst its peers especially its transfer of huge sums into Consolidated Revenue Fund (CRF). He urged the Management not to rest on its oars and strive to achieve greater heights. Hon. Fakeye went down memory lane to recall the 2008/2009 banking crisis. He requested the Corporation and other regulatory authorities to come with ideas and advise the Honourable members on the ways of salvaging the financial situation. He called on the Corporation to bring forth credible proposals for the amendment of the NDIC Act, BOFIA as well as other banking related laws.