The intensified efforts by the Asset Management Corporation of Nigeria (AMCON) to recover the humungous debts being owed by notorious obligors is providing an urgent boost to the financial sector and the overall economy. This Corporation’s vital mandate has been necessitated by new challenges thrown up by recalcitrance of some high profile and highly connected debtors as well changes in the economy which demand new and more effective approaches. One of the outcomes is the strengthening of measures to improve re-payments on non-performing loans.
AMCON’s commendable efforts have translated to a decrease in non-performing loans over the past two financial years. The Central Bank and National Bureau of Statistics recently reported that gross loans as of the end of 2018 stood at N15.35tn, out of which N1.79tn were non-performing. This is lower than the 2017 figure which stood at N15.96tn out of which N2.36tn were non-performing. To put in perspective how staggering these figures are, non-performing loans owed by some unapologetic debtors equates to a quarter of the 2019 proposed National budget.
The Corporation has recently taken commendably innovative measures to achieve its recovery mandate. Firstly, it is working with the National Assembly to strengthen the AMCON Act in order to enhance its capacity to improve collection on behalf of the Nigerian people. The proposed amendment, currently at the public hearing stage, seeks to allow AMCON to create a sinking fund to rescue ailing banks should the need arise. Contributions to the sinking fund will come from banks themselves, which will reduce the burden of liability on government and depositors. This will in turn ensure Federal government funds are not used to salvage the liabilities of AMCON.
Recently, the Senate indicated its support for AMCON to collaborate with the Federal Ministry of Finance (FMF), the CBN, and the office of the Attorney General to propose that the President issue an Executive Order on seizure of assets of persons who are indebted to AMCON. This measure has been necessitated as a last resort for unapologetic debtors who have shown no intention to pay or continually service their debts. The Corporation initially never placed pressure on obligors to make one-time payments given the large sums and the many years that the debts have been outstanding. Itthus created several avenues for negotiable repayment plans over agreed timelines.
However, blatant denial of obligations or impunity shown by high net worth debtors has necessitated a change in strategy for the commission. AMCON understands that a significant portion of outstanding debt was gotten from taxpayer’s funds and it has a responsibility of recovery to regain the public’s trust.
This change in strategy now prioritizes asset seizures over negotiations and came from the realization that more than 80% of AMCON’s recoveries were from forfeitures, take-overs or outright cash payment. Where the registered assets of an indebted company are not enough to clear its obligations, then AMCON would also go after the directors and their private companies. Part of the new strategy will see Directors of companies also be sought after so that they would also be forced to take part in repaying the loans.
Recently, the MD/CEO of AMCON, Mr. Ahmed Kuru appealed to members of the legislature, through the senate committee on banking, insurance and other financial institutions to provide full co-operation in order to pursue asset seizures from politically exposed and business heavyweight debtors. This led to the Senate’s support for the Corporation’s audacious decision to compile and publish the list of the largest debtors in major daily newspapers across the country in October 2018. This move resulted in improved cash repayment and voluntary asset forfeiture.
In addition, AMCON is working with the Judiciary to improve its role as part of the debt recovery process. At an interaction with Justices of the Court of Appeal under the theme: ‘AMCON Regime: A paradigm shift in debt recovery”, Mr. Kuru noted that despite the overwhelming powers granted to AMCON by law, the slow pace of court proceedings severely hinders speedy resolutions for recovery. Specifically, he highlighted that over 3,000 cases involving loan defaulters were currently stuck in various courts in the country. It has been suggested that AMCON cases terminate at the Appeal Court for expediency. This will be a solution to the delay tactics used by defaulters to keep their matters in court for years with no resolution in sight.
Furthermore, AMCON has re-strategized its Asset Management Partners (AMPs), a consortium appointed with specialist skills to recover debt; carry out banking, legal, valuation and accounting services. The AMPs were recruited in 2016 as part of the corporation’s renewed strategy to resolve debt portfolios of over 12,000 loans worth aroundN740billion. This new approach included the disengagement of AMPs who were unable to show timely progress in their recovery efforts as well rewarding those that have shown good results with more portfolios. The Corporation has improved the empowerment and skills of the AMPs to boost their ability to trace obligors and achieve set recovery objectives.
With over N5 trillion currently outstanding, these highly commendable efforts illustrate the sense of urgency that the AMCON is working with. Their intervention prevented the collapse of several banks allowing services critical to the economy to continue. The likely loss of confidence that would have followed would have led to widespread disruption and ultimate collapse of the financial system in Nigeria. AMCON’s impressive efforts to protect the country’s interests despite extremely stringent challenges cannot be overstated.
Udo-Akpan is a public affairs analyst
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