Thursday, September03, 2020 / 12:08 PM / by  CSL Research / Header ImageCredit: The Interview Magazine

The Managing Director of the Asset ManagementCorporation of Nigeria (AMCON), Ahmed Lawan Kuru, has called on the NationalAssembly to support the corporations' efforts in recovering debt estimated atover N5trn from obligors. According to Ahmed Lawan, the Senate could exertpressure on some of the obligors through its Committee on Banking, Insuranceand Other Financial Institutions. This was disclosed after the Senate committeemet with the leadership of the corporation to review the impact of COVID-19 on AMCON'spolicies and processes, with a view to repositioning it for optimalperformance.

AMCON was established in 2010 to buythe Non-Performing Loans (NPLs) of Nigerian banks with a view to stabilisingthe banking system and is currently being funded by a combination of loanrecoveries, contributions from the Central Bank of Nigeria (CBN), sale ofassets pledged, and a sinking fund levied on the banks. Banks were initiallymandated to contribute 0.3% of total assets to the sinking fund. This wasfurther increased to 0.5% of total assets in 2013 (and 0.33% of contingentliabilities).

Since the last crash in oil prices in2015 that eventually led to the economic recession witnessed in 2016, AMCON hasstruggled over the years in servicing its c.N5.4tn (US$14bn) of liabilities (which also includesbonds held by the central bank). The former AMCONChairman, Muiz Banire was once quoted in the local media that 20 individualsand companies owe 67% of the N5.4trn debt. The high concentration of theAMCON's debt in the hands of a few obligors who are regarded as political "bigwigs" has raised eyebrows that their political power and ability to elongatejudicial process could have contributed to the slow progress in debtrecovery.   

AMCONhad previously tried a number of methods to recover these loans, such as namingof debtors in the print media, appointing Asset Management Partners (aconsortium with specialist skills required to ensure recovery and debtresolution) and even forming a task force comprising  the Economic andFinancial Crimes Commission (EFCC), Nigerian Financial Intelligence Unit(NFIU), the Independent Corrupt Practices Commission (ICPC). Despite thesemeasures, the corporation has not seen significant improvement in debtrecovery.

The federal government has also supportedthe recovery efforts of the corporation with the use of legislation. In 2019,President Muhammadu Buhari signed the Asset Management Corporation of Nigeria(Amendment) Act, 2019 which among other things empowers AMCON to; (a) Place anybank account or any other account comparable to a bank account of a debtor ofan eligible financial institution under surveillance (b) Obtain access to anycomputer system component, electronic or mechanical device of any debtor with aview to establishing the location of funds belonging to the debtor (c) Obtaininformation in respect of any private account together with all bank financialand commercial records of any debtor of any eligible financial institution. Inour view, all efforts to recover these debts will be further exacerbated by theimpending recession and attendant impact on sectors such aviation, oil and gas,and manufacturing which AMCON is exposed to.

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