1.0 I am delighted to welcome the President and Members of the Governing Council of the Institute of Directors (IoD) Nigeria, to the Nigeria Deposit Insurance Corporation (NDIC). I thank you for finding time out of your busy schedules to visit the NDIC. I am particularly delighted because the IoD is a principal organization that is consistently promoting professional competence and integrity through its efforts at helping Directors to fulfil their leadership responsibilities in creating wealth for the benefit of the nation at large.
2.0 Mr President and Members of the Governing Council of IoD Nigeria, as a component of the financial safety-net, deposit insurance is pivotal to the proper functioning of a modern economy. A deposit insurance system (DIS) is a financial guarantee to depositors, particularly the small ones, in the event of a bank failure. It developed out of the need to protect depositors, especially the uninformed, from the risk of loss and to also protect the banking system from instability occasioned by runs and loss of confidence.
3.0 The NDIC is an independent agency of the Federal Government of Nigeria, established by Decree 22 of 1988, which was repealed and replaced with the NDIC Act 16 of 2006. As a key financial safety-net player, the Corporation was established as a risk-minimizer with the broad mandate of deposit guarantee, banking supervision, failure resolution and bank liquidation. The NDIC is particularly keen on sound corporate governance.
4.0 Good corporate governance plays an important role in the advancement of sustainable development. It promotes accountability, transparency, efficiency and rule of law. In a developing economy like ours, good corporate governance is necessary in order to – (i) Attract Investors (both local and foreign) and assure them that their investment will be secured and efficiently managed, and in a transparent and accountable manner; (ii) Create competitive and efficient companies and business enterprises; (iii) Enhance accountability and performance of those entrusted to manage the companies; and (iv) Promote efficient and effective use of limited resources. Sound corporate governance practices is expected to provide proper incentives for the board and management to pursue objectives that are in the interests of the company and shareholders and should facilitate effective monitoring, thereby encouraging firms to use resources more efficiently.
5.0 Analysing the effects of the global economic crisis, including striking collapse of many companies, the huge increase in unemployment and the increased number of people living on the poverty line and below, it can be concluded that some of these problems are result of various weaknesses and failure of corporate governance in public institutions.
6.0 In Nigeria, corporate governance became a front burner in public discourse since the banking crisis of 2009. The 2009 CBN and NDIC joint special examination of all the 24 banks in the system, revealed that 10 were critically distressed as a result of many factors including poor corporate governance practices and inadequate disclosure and transparency regimes, amongst others.
7.0 The first Code of Corporate Governance for banks was issued by the CBN in 2006 and revised in 2014. The Security and Exchange Commission (SEC), issued Code of Corporate Governance for Publicly Quoted Companies in 2003 and was revised in 2009. There is also the Code of Business Ethics and Principles on Corporate Governance for the Insurance Industry (the NAICOM Code) and Code of Corporate Governance for Licensed Pension Operators (PENCOM Code). All these were designed to ensure transparency and accountability in the operations of business organizations.
8.0 In 2016, the Financial Reporting Council (FRC) of Nigeria issued the Unified National Codes of Corporate Governance (NCCG) for private sector, not-for-profit organisations and the public sector. It would be recalled that this code was later suspended by the government on 28th October, 2016 due to certain controversies surrounding some sections of the code. However, FRC has just inaugurated a Technical Committee on 18th January, 2018 to review the suspended National Code of Corporate Governance (NCCG).
9.0 Identified lapses in corporate governance particularly in the banking sector led to several corporate governance reforms introduced in the system. Some of the reforms included – Instituting a common financial year end for all banks; Restricting the tenure of bank CEOs and Board members to a maximum of 10 years; the introduction of Independent directors; among others.
10.0 Also, part of the corporate governance reforms was the recent full adoption of IFRS in Nigeria. The full adoption of the IFRS will go a long way to enhance corporate governance profile and practice of companies in Nigeria by improving transparency in financial reporting as well as the quality of financial statement.
11.0 Currently, the nation’s banking industry in terms of regulatory assessment and rating, indicated strong fundamentals. Notwithstanding this development, there are still some noticeable corporate governance lapses in the system. Some of the lapses include, the issue of competitiveness and transparency in the process of selecting directors.
12.0 Capacity building through appropriate directors’ education is an important element of promoting greater awareness of, and quality of corporate governance. The capacity building envisaged should focus on continuous training and retraining of directors on emerging issues such as Financial Technology (FinTech), Virtual Currencies, Digital Finance, Cyber-crimes, etc. To achieve this, there is the need for the IoD Nigeria, CIBN, FITC and the Society for Corporate Governance to collaborate and synergize in promoting continuous director’s education in this regard and ensure transparent Corporate Governance in the country.
13.0 Let me use this opportunity to congratulate the IoD for the step taken so far in its effort to consolidate its position as a promoter of good Corporate Governance in Nigeria by approaching the National Assembly to obtain a Charter status from the government. I strongly believe that this official recognition will go a long way to enhance its quest for the institutionalization of good corporate governance in the nation’s public and private sectors. A Charter for the IoD Nigeria will enable it safeguard the integrity and status of Directorship as a Profession by serving as the Professional body for Directors in Nigeria.
14.0 In NDIC, we have continued to play a leading role in ensuring that banks have in place the right governance culture which is focused on delivering the right long-term obligations and value to stakeholders. We are actively collaborating with the CBN to ensure the enforcement of sound corporate governance practices that require the operations of banks to be driven by principles rather than just commercial expediency.
15.0 Finally, I want to use this opportunity to appeal to the Distinguished Members of the Governing Council of IoD, to support the NDIC in its efforts at ensuring a safe, sound and stable banking system in Nigeria. I want to use this medium to solicit for your support, especially on the need to further assist us in creating adequate awareness among IoD Members on the benefits of DIS as well as on the mandate and activities of NDIC. Members of the IoD should endeavor to always report noticeable issues that border on unethical/sharp practices or professional misconduct in the banking system to the NDIC or CBN.
16.0 Once again, I want to sincerely appreciate the President and members of the Governing Council of IoD Nigeria, for this visit. I wish you God’s guidance and protection as you go back to your various destinations.