The federal government at the weekend raised concerns on the over N5trillion owed the Asset Management Corporation of Nigeria (AMCON) and has vowed to deal with those debtors.
Finance Minister Zainab Ahmed who raised the concerns said the government will not right off those debts of AMCON obligors, but will withhold any payments due them and as well ensure not to have any more dealings with them until they repay those monies.
Ahmed said the hard decision “is because AMCON’s debts sit on the government’s balance sheet with Central Bank of Nigeria (CBN).
“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,” she announced in Abuja while inaugurating the newly re-constituted AMCON board.
AMCON has only been able to repay just over N1trillion out of its total debt obligation to the CBN currently in excess of N5 trillion since its creation in 2010.
“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,” the minister added.
The minister said she has “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.”
AMCON has been able to recover over N1trillion since inception to 2018 year end, out of the recovered sum, 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 non-performing loans worth approximately N3.7 trillion from 22 commercial banks; injected N22 Trillion as Financial Accommodation to 10 banks.
As a result, about N3.66 trillion of depositors’ funds were protected and approximately 14,000 jobs were saved.”
Created with a ten –year lifespan, AMCON’s two major roles are to bail out banks through purchase of non-performing loans; and then 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 tax payers’ money which must be avoided,” Ahmed noted.
“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.”
Managing Director of AMCON Mohammed Kuru admitted at the event that “the most difficult thing is debt collection. When we took over we saw the body language of this government. We know that with the inauguration of this board, things will be more efficient. The turnaround time will be faster.”
According to him, “it is not an easy task but the Act has provided for the situation that we are going through.
“We have been able to recover N1trillion but we have more than N5trillion that is outstanding. If today AMCON disposes all that is in its possession, we may be able to recover maybe N1trillion, willing buyer-willing seller because the framework provides that it should be able to accommodate the N2.2trillion because most of the assets we are holding are from the banks and they were over valued. So if today I sell all the assets in my possession-if there is a willing buyer- I won’t be able to recover N1trillion.”
He then aligned with the government’s position that those obligors in thir books must pay.
“Those that are doing big business with government must be made to settle either with AMCON or Inland Revenue because they can’t be owing and still want to do business with the government.”
Onynye Nwachukwu, Abuja
