2 hours ago
2
For the Asset Management Corporation of Nigeria (AMCON) to effectively perform its duty of recovering bad debts, help to stimulate the recovery of Nigeria’s financial system by purchasing illiquid and difficult-to-value assets from banks, the support of the judiciary is important.
It is also expedient that the tenor of time of the agency be extended considering the number of cases it is involved in and given the persistent challenges in the financial sector.
This was disclosed by the Managing Director and CEO of Asset Management Company of Nigeria (AMCON), Mr. Gbenga Alade, who spoke at a Stakeholders Retreat with the Senate Committee on Banking, Insurance, and other Financial Institutions at the weekend.
Alade remarked that judicial support is crucial in addressing AMCON’s extensive backlog of over 3,000 cases and urged the judiciary to expedite the adjudication of AMCON-related cases within the 60 to 90-day timeframe stipulated by the AMCON Act.
He said, “We have more than 3,000 cases in various courts around the country; from the court of first instance to the Supreme Court. We have continued to deepen our interaction with the leadership of these courts.”
Alade explained that AMCON’s recovery efforts are increasingly reliant on judicial efficiency. “Our hope is that AMCON cases would be adjudicated within the time limit enshrined in the AMCON Act,” he stated, underscoring that they are not seeking anything beyond what the law stipulates.
He implored the senators to continue to assist in raising awareness among government agencies about the risks associated with engaging with debtors (contractors) who have outstanding liabilities with AMCON.
Despite initial challenges, Alade reported significant progress in recoveries, with AMCON having recovered approximately N2.011 trillion to date. This figure comprises 44 per cent in cash recoveries and 56 per cent from sale of proprietary assets, clawback, and repurchases, among others.
The corporation has successfully disposed of assets valued at around N651 billion since its inception, contributing to job preservation and business rescues across Nigeria.
Alade added that AMCON paid N2.929 trillion to the Central Bank of Nigeria (CBN) between 2013 and 2023, including contributions to the Sinking Fund by other Deposit Banks and AMCON recoveries.
However, AMCON faces a critical juncture, with opinions divided on its future. Some advocate for its winding down, while others argue for its continued existence given the persistent challenges in the financial sector.
Alade expressed concern that a premature closure of AMCON could lead to a resurgence of non-performing loans and potential bank failures. “One wonders if any lessons were learned from activities of the past,” he said.
He said AMCON resolved to continue to pursue the recoveries of the debts owed by a few individuals who prefer to remain in courts than settle their debts.
“They believe that with Corporation’s sunset date drawing closer, they would walk away free, and the debt will be added to already overloaded domestic debt profile of the nation. We will not allow this to happen because tax-payers’ monies may be used to repay these debts.
“As a matter of fact, only about 350 obligors make up more than 70 per cent of the entire debt profile of the Corporation. Some of these obligors still fly private jets, get government contracts, and continue to live lavishly in society.”
Senator Adetokunbo AbiruChairman of the Senate Committee on Banking, Insurance, and other Financial Institutions, Senator Adetokunbo Abiru said the theme of the retreat provided an invaluable opportunity for senators to reflect on the critical role that AMCON has played in stabilizing the financial sector and to chart the path forward in view of its sunset clause.
He noted that the Corporation was established as an intervention agency to halt the drift caused by Non-Performing Loans (NPLs) in the banking industry with its adverse impact on savers and the entire economy.
“Admittedly, the setting up of AMCON has succeeded, to a large extent, in not only stabilizing the banking industry given that the purchase of Eligible Banks Assets (EBA) reinjected the much-needed liquidity into the banking system, but also helped in restoring confidence in the financial sector.”
According to him, “Without any doubt, AMCON was established at a time of considerable turmoil, in the wake of the global financial crisis of 2008, to clean up the books of many ailing banks,” adding that, “It can be said that as a result of AMCON’s interventions, thousands of jobs were saved as a number of banks were rescued from the brink of collapse.”
He noted that they must accept the reality that AMCON was not designed to be a permanent fixture in the country’s financial landscape.
“I am aware that the AMCON Amendment Act of 2021 extended the life of AMCON for another five years although it provides that the current tenor may be extended by a resolution of the National Assembly. So, we now stand at a pivotal moment where we must transition beyond AMCON as it is nearly impossible for the Corporation to recover substantial loans by 2026 when it is expected to wind down.
“Regrettably, despite 14 years of its existence, AMCON still carries massive loans in her portfolio put at circa N5 trillion with a significant portion of the AMCON debt due to the CBN. So, I expect that at this retreat, we should come up with more effective options for dealing with outstanding loans beyond the strategies already adopted, just like the Korea Asset Management Company (KAMCO).
“It goes without saying that a major challenge remains how to recover the taxpayers’ money used to purchase the EBAs so they can be channelled to critical areas such as education, health, and provision of infrastructure. This is against the backdrop of the fact that many businesses in Nigeria are currently battling economic headwinds, which make debt recovery efforts more difficult now than ever before.”
