- 12,000 non-performing loans acquired
- Agency recovers N1trn
The Federal Government is considering various options of resolving the logjam between the Asset Management Corporation of Nigeria (AMCON) and its obligors over debts estimated at over N5 trillion. Minister of Finance, Mrs. Zainab Ahmed, who stated government’s thinking over the weekend, said the options being considered include, to seize payments due to them and blacklist them from getting Federal Government’s patronage. Speaking at the inauguration of AMCON Board of Directors in Abuja, Ahmed said: “It must be emphasised that government would not deal with debtors that have failed to honour their obligations with AMCON. Payments due to some of these obligors will be put under lien until they enter into a resolution agreement with AMCON.”
The minister denounced the attitude of recalcitrant obligors, stating that AMCON’s debts sit on the government’s balance sheet with Central Bank of Nigeria (CBN). Ahmed said: “AMCON’s repayment of its indebtedness to the CBN was over N1 trillion. AMCON’s total debt obligation to the CBN is currently in excess of N5 trillion. It is evident that the Federal Government cannot afford to write off this debt in the short term, hence, our moral obligation to pursue obligors and recover the debts owed.
“I have been briefed on some of the challenges facing the corporation, which include obligors resorting to all manner of tactics to avoid honouring their obligations. Whilst some are still enjoying government patronage, others are using the judiciary and adopting legal technicalities to stall recovery,” she added. According to the minister, AMCON has recovered over N1 trillion since inception to 2018 year end. Out of the recovered sum, she said cash accounted for 60% while non-cash assets such as properties and equity securities accounted for the balance of 40%. “The corporation has acquired over 12,000 nonperforming loans worth approximately N3.7 trillion from 22 commercial banks; injected N22 trillion as Financial Accommodation to 10 banks.
The direct impact of that action is seen in the protection of about N3.66 trillion of depositors’ funds and approximately 14,000 jobs were saved. “AMCON has two major roles. One is to bail out banks through purchase of non-performing loans; and the second is to recover the loans from the obligors. “It has successfully bailed out the banks, it is now at a stage where it must recover the debts. Failure to recover may result to serious consequences, including recourse to taxpayers’ money, which must be avoided.
“For an organisation with sunset date, all hands must be on deck to provide the support required. Considering the huge portfolio of debt, no obligor must be allowed to go scot-free no matter how highly placed.” In his remarks, the Managing Director of AMCON, Mohammed Kuru, said debt is the most difficult thing to collect.
“We know that with the inauguration of this board, things will be more efficient. The turnaround time will be faster. We have been able to recover N1 trillion, but we have more than N5 trillion that is outstanding. If today, AMCON disposes all that is in its possession, we may be able to recover maybe N1 trillion, willing buyer-willing seller because the framework provides that it should be able to accommodate the N2.2 trillion because most of the assets we are holding are from the banks and they were overvalued.
“So, if today I sell all the assets in my possession – if there is a willing buyer – I won’t be able to recover N1 trillion.” Kuru appealed to the Finance Minister that: “Those obligors in our books must pay. Those that are doing big business with government must be made to settle either with AMCON or Federal Inland Revenue Service because they can’t be owing and still want to do business with the government.” AMCON board chairman, Mr. Muiz Banire (SAN) assured the minister that board members would bring to bear wealth of experience acquired in various fields to make success of the job. He said AMCON would devise various mechanisms to compel obligors to honour their obligations.