by Peace Omenka
The challenges confronting the Asset Management Corporation of Nigeria (AMCON) are quite herculean. This is why the agency requested all agencies of the Federal Government and all stakeholders to work with it in its recovery of a massive outstanding debt of N4.4 trillion. The corporation disclosed that failure to recover the debt would negatively impact strongly against the nation’s economy as the debt is bigger than the entire 2021 capital expenditure of the Federal Government.
AMCON was created on the 19th of July, 2010 to restore sanity to a financial system badly bruised by debts. Initially it recorded success in resolving the non-performing loans (NPL) assets of the banks in the country. The corporation’s main objectives were to assist financial institutions to efficiently dispose of eligible bank assets; to efficiently manage and dispose of appropriate bank assets acquired by it; and obtain the best achievable financial returns on liable bank assets or other assets handled by the agency.
The work put in place by AMCON assisted the Federal Government in successfully managing the debt crisis, and rescued the banking system from imminent systemic collapse few years ago.
Jude Nwauzor, AMCON Head, Corporate Communications revealed in July 2020 that the organization ‘recovered above N1.2trn just as it has sold assets worth about N500bn and has resolved close to 5000 Eligible Bank Assets (EBAs). The Corporation has successfully paid over N2trn into the CBN’.
‘Recall that AMCON acquired over 12,000 nonperforming loans (NPLs) worth N3.7 trillion from 22 banks and injected N2.2 trillion as financial accommodations to 10 banks in order to prevent systemic failure,’ he added.
However, these achievements might dissolve into oblivion if AMCON fails to substantially recover the N4.4 trillion outstanding bad debts they had purchased.
The subsequent amendment made in May 2015, through the removal of bank-client privacy, gave the corporation powers to probe the financial details of debtors. Records revealing traces of funds of any debtors in Nigeria or a foreign country were retrieved. The body was now able to access the financial details of debtors and monitor their accounts.
The over N4 trillion debt acquired from eligible financial institutions is said to be from about 350 individuals. These individuals are said to be responsible for 80 percent of the amount. The institution set up by the government to resolve the non-performing assets of the banks has incurred staggering debts, while individual culprits are yet walking free.
The House of Representatives had earlier resolved to investigate AMCON for its high rate of debt stock. The Committee on Banking and Currency was instructed to investigate the corporation’s debt including the debtor’s refusal to pay.
Cornelius Nnaji, a member of the House of Representatives stated that the debt accumulation has reached and exceeded the N800 billion debt ceiling of the corporation. AMCON in 2018 published about 20 names of corporations and agencies who were involved in the debt. The organization has also threatened to publish the full list and released a documentary on notable Nigerians who still owe the corporation.
AMCON had disclosed in 2019 that Nigeria’s financial sector might be heading towards another era of high non-performing loans and this would massively affect the economy, especially in this period of recession.
Several methods have been utilized to recover these loans. Exposing debtors on the pages of newspapers, nominating Asset Management Partners (an organization with requite skills to help with recovery and debt resolution), and creating a task force through the merger of the Economic and Financial Crimes Commission (EFCC), Nigerian Financial Intelligence Unit (NFIU) and the Independent Corrupt Practices Commission (ICPC) have not led to significant results.
The Federal Government, in order to assist with the debt recovery of the corporation, signed the Asset Management Corporation of Nigeria (Amendment) Act in 2019. This granted the body the power to (a) Place any bank account or any other account comparable to a bank account of a debtor of an eligible financial institution under surveillance (b) Obtain access to any computer system component, an electronic or mechanical device of any debtor to establish the location of funds belonging to the debtor (c) Obtain information in respect of any private account together with all bank financial and commercial records of any debtor of any liable financial institution.
It’s quite surprising that with the policies put in place by the Federal Government to assist the corporation, the accumulated debts have persisted. Legal experts believe that the Asset Management Corporation of Nigeria (AMCON) can achieve its debt recovery target if it leverages the full power of the newly amended AMCON Act. Many analysts are puzzled that AMCON is showing an unnecessarily high level of restrain when there so much time constraints.
Muyiwa Balogun, a legal consultant, and Senior Partner at a law firm predicted that AMCON’s debt would rise to N6.6 trillion in 2024 if this level of lethargy persists.
A ten-year period was set for AMCON to achieve its aim after which its tenure will expire. The period would soon lapse and yet over N4 trillion debt has not been recovered.
The big question remains- with the few years remaining in AMCON’s lifespan, can the agency work with it in its effort to recover a massive outstanding debt of $4.4 trillion debt within this short period?
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