Indications have emerged that the Asset Management Corporation of Nigeria (AMCON) is finding it harder by the day to recover its over N5 trillion debt burden due to lingering cases in the Nigerian court.
The International Monetary Fund (IMF) in March 2019 expressed worry that more than 3,000 AMCON’s debt recovery cases are currently disputed in court, adding that the corporation is creating moral hazard.
Already, AMCON’s Managing Director/Chief Executive Officer, Ahmed Kuru, last week made comments that suggested the corporation if finding it difficult if not impossible to fully recover the debts.
For instance, on why the AMCON cannot deal decisively with this crop of obligors, Kuru told his audience that the Act establishing the corporation did not empower it to arrest and prosecute people like some other agencies of the government.
According to him, AMCON has no power to arrest these ‘powerful’ people as it depends largely on judicial processes to recover and these judicial processes are slow.
His words: “Given our sunset date, which is around 2023/24; we are determined to go after these obligors within the ambit of the law in line with the AMCON Act.
“We have changed our strategy to more of enforcement, because the negotiations have failed. We now want to go a step further by working with the ICPC and the EFCC, which will enable us to go investigate the credit processes.”If we do not establish this deterrent, we are likely to go round the era of NPL circle again.”
Kuru who was the guest speaker at the July 2019 edition of the breakfast meeting, organized by the Nigerian – American Chamber of Commerce, had threatened to document in a permanent format for generations yet unborn, the so-called big men and women that were behind the over N5 trillion debt burden, which AMCON has been battling to recover.
An investment Research expert at Afrinvest (West) Africa Limited Mr. Adedayo Bakare in a chat with Saturday Tribune said the fact that some debtors are in leadership positions does not mean they have the money to pay back their huge debts, except those who suggest so, are assuming that those in leadership positions are stealing a lot of money that would enable them to pay back, which may not be totally true.
From the AMCON perspective, Bakare observed that apart from the fact that some people do not have the money to pay back; recovering debt is a difficult task especially when there are debtors creating unnecessary legal barriers to prevent the corporation from getting the money.
Although AMCON’s intervention was very necessary at the time it did because it saved the banks and preserved depositors’ money, Mr Bakare said AMCON has to wait for judgment on those cases to be able to know what further steps to take.
Obviously, he said, Nigeria has to find a way to wind down the operations of AMCON because it is a huge burden not only to the banks that make annual contributions to the sinking fund, but also on the CBN.
Bakare said the AMCON obligations are telling on CBN’s balance sheet as all the debts taken up by the corporation will have to be paid up somehow. Such huge amount of money could have been deployed into productive sectors of the Nigerian Economy, he regretted.
This is coupled with the issue of moral hazard, whereby banks tend to undertake any kind of risk knowing that there is an AMCON somewhere to buy off their toxic assets. The case of Polaris Bank is a good example according to Bakare.