A Review of the Nigerian Energy Industry

World Bank asks other countries to emulate NDIC target fund ratio


11 July 2015, Abuja – The World Bank has described the Target Fund Ratio Framework, TFRF, of the Nigeria Deposit Insurance Corporation, NDIC, as a model which should be emulated by other deposit insurance institutions across the globe. Mr Julian Casal who led the World Bank technical team on a 4-day working visit to the corporation on a formal presentation of the Target Fund Ratio Framework and staff capacity building said that each deposit insurer needed a robust fund with which to meet demands of its mandate.

According to him, the NDIC’s TFRF was suitable in determining the adequacy of the Corporation’s Deposit Insurance Fund (DIF) He said that the bank would adopt the document as a benchmark for other African deposit insurance Corporations. Responding, the NDIC’s Managing Director of NDIC,
Alh. Umaru Ibrahim expressed appreciation to the World Bank for its continuous support towards the Corporation’s capacity building initiative and effective discharge of its mandate.

He assured that the corporation would continue to welcome inputs from the global institution towards creating an atmosphere of confidence in the Nigerian banking industry.

TFRF is the ratio of fund that determines the optimal fund level that enables a deposit insurer to effectively meet its obligation to depositors. The International Association of Deposit Insurers (IADI) Core Principle 11 for Effective Deposit Insurance System, provides that the Fund Reserve Ratio should be based on clear, consistent and well developed criteria.

The development of the Target Fund Ratio by the Corporation was premised on the recommendation at the end of an IADI international workshop on the “Methodology for Assessing Compliance with the IADI Core Principles for effective deposit insurance system which was hosted by the Corporation in 2011.

The Corporation was advised to comply with some Core Principles, among which was Core Principle 11 on funding. Consequently, the Corporation approached the World Bank for technical assistance towards the development of the Target Fund Ratio and the request was granted in 2014 under the World Bank Financial Sector Reform and Strengthening (FIRST) Initiative.

The World Bank team, comprising Messrs Julian Casal, Jan Philipp Nolte and John O’Keefe interacted with the NDIC staff from relevant departments with a view to clarifying the data and other issues considered in establishing the target fund ratio framework.
*Emma Ujah – Vanguard

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