GDP rises to 3.54% in second quarter of 2022 through synergy with CBN, NDIC — Finance Minister

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By Matthew Denis Abuja

The Minister of Finance Budget and National Planning Dr Zainab Shamsuna Ahmed has stated that the Ministry in collaboration with the Central Bank of Nigeria, Nigerian Deposit Insurance Corporation and other relevant Government agencies has made the country’s Gross Domestic Product (GDP) rise to 3.54% year-on-year in the second quarter of 2022.

The Minister made the disclosure during the International Association of Deposit Insurers (IADI) Africa Regional Committee (ARC) Workshop held in Abuja on Tuesday.

She said, “It is worthy of note that, the success recorded by NDIC can be attributed to the effective collaboration with other safety-net participants in Nigeria, particularly the CBN, the Federal Ministry of Finance and other members of the Financial Services Regulation Coordinating Committee (FSRCC). The Federal Ministry of Finance is held in some quarters, for example in Nigeria, as a critical safety net participant that oversees the fiscal policy.

“The Ministry under my watch has implemented a set of difficult but necessary reforms as well as successfully engaged international partners to help the country navigate an extremely challenging economic environment.  That to a great deal, in collaboration with the CBN, NDIC and other agencies, explains why the country’s Gross Domestic Product (GDP) rose to 3.54% year-on-year in the second quarter of 2022.

“The GDP growth marks the seventh consecutive quarter of GDP growth, since the recession recorded in Q3 2020.  The Nigerian economy has so far shown signs of resilience in the face of economic headwinds like the conflict between Russia and Ukraine, which affected the global economy.”

Ahmed stressed that the banking sector remains pivotal in supporting the real economy through the provision of innovative products and services to all relevant stakeholders.

“However, the fiduciary nature of banking business, coupled with increased social-economic challenges across the globe, has increased the risk of banks’ failure, with significant implications for depositors’ losses and erosion of public confidence in the banking system.

“The negative impact of these challenges on economic growth and financial sector stability in most economies of the World, raised a number of questions concerning the role of DIS in contributing to financial system stability. It has equally demonstrated the important role played by the deposit insurance system, as a component of financial safety-net arrangements in most jurisdictions across the globe, given that, depositor protection is a critical element necessary for maintaining and restoring financial stability.”

According to her the Nigerian economy, like others, felt the brunt of the global economic distortion, having to go into recession twice in the space of five years. However, given the resilience of the nation’s financial system, we came out within months. We also make bold to say that despite these economic challenges, no depositors’ fund was lost given the effectiveness of our agencies, most especially the CBN and the NDIC.

“It is well known that DIS, thus provide financial guarantee to protect depositors in the event of bank failure and therefore forms a critical component of the financial safety-net arrangement. This guarantee offered by the DIS plays a major role in strengthening depositor confidence in the financial system during crisis.

“Deposit insurers play an effective role during crisis by way of performing the roles and responsibilities as stipulated in their mandates. The NDIC, which was established in 1989, with a mandate of a risk minimizer, has since inception and most especially during critical times been able to allay the fears of depositors through; its wide array of public enlightenment/education programmes, collaboration with the CBN in the efficient supervision of insured institutions to promote sound risk management which reduces likelihood of failure and effective resolution of failing banks. All these have helped to improve public confidence, protect depositors and promote the stability of the Nigerian financial system.

“I wish to observe that the topics for the discussions in this workshop have been carefully chosen, bearing in mind the crisis in the global economy that has transcend into the African financial system. For instance, the workshop will discuss the role of deposit insurer in early detection and timely intervention. This is expected to highlight the evolution of various methods used by deposit insurers to detect crisis and intervene in a timely manner before it crystalizes.”