Deposit Insurance in Africa: A Veritable Mechanism for Depositor Protection

• Jurisdiction: South Africa
• Citation: (2015) 2(1) Journal of Comparative Law in Africa 101
• Pages: 101-110
• Date: 24 May 2019
• Author: Panshak Ephraim Haggai
• Published date: 24 May 2019

DEPOSIT INSURANCE IN AFRICA: A VERITABLE

MECHANISM FOR DEPOSITOR PROTECTION

PANSHAKEPHRAIM HAGGAI

Legal Off‌icer,Nigerio Deposit Insurance Corporation (NDIC) *

The history of the establishment of the f‌irst deposit insurance system dates as far back as

1933 in the United States of America. Since then, the system has been recognised as an

invaluable component of an eff‌icient f‌inancial safety net in the economy of nations that

have a stable f‌inancial system, and has been adopted and domesticated by many countries

across the world. Despite the apparent benef‌its of a deposit insurance system, its

penetration on the African continent has been low. This article seeks to examine the

deposit insurance system and highlight its benef‌its to the f‌inancial systems that have

adopted it on the African continent. Some of the reasons for the low penetration of this

insurance system in Africa are examined and recommendations on how that situation

could be reversed in the long run areproffered.

[L’histoire de la création du premier système d’assurance-dépôts (DIS) remonte à aussi

loin que 1933 aux États-Unis d’Amérique. Depuis lors, le DIS a été reconnu comme un

élément précieux d’un reseau de sécurité f‌inancière eff‌icace dans l’économie des pays qui

ont un système f‌inancier stable et avait été adoptée et domestiqué par de nombreux pays à

travers du monde. Malgré les avantages apparents de la DIS, sa pénétration sur le

continent africain a été faible. Ce document vise à examiner le DIS et à mettre en évidence

ses avantages pour les systèmes f‌inanciers qui l’ont adoptée sur le continent africain. Le

travail veut également discuter plusieurs des raisons de la faible pénétration du DIS en

Afrique et proposer des recommandations sur comme cette situation pourrait être inversée

dans le long terme.]

Key words: Africa, banking, deposit insurance, f‌inancial system

Abbreviations: ARC Africa Regional Committee

FDIC FederalDeposit Insurance Corporation

FSRCC Financial Services Regulation Coordinating

Committee

IADI International Association for Deposit Insurers

IMF International Monetary Fund

NDIC Nigeria Deposit Insurance Corporation

US United States of America

Introduction

Banking is a commercial transaction with a difference. As a sign of its strategic

importance to the economy of any nation, banking business the world over is

subjected to intensive prudential regulation.

1

There are a number of reasons

for this. First, banks serve as f‌inancial intermediates — where surplus funds

* E-mail: haggaipanshak@gmail.com. The views expressed in this article are those

of the author and do not necessarily represent the views of the NDIC.

1

See International Competition Network (2005) Antitrust Enforcement in Regu-

lated Sectors Subgroup 1 Bonn, June 11. Available from:

competitionnetwork.org/uploads/library/doc382.pdf> (accessed 15August 2014).

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(2015) 2(1) Journal of Comparative Law in Africa 101

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