Nigeria’s bad bank: Is AMCON a vital cure or a chronic affliction?

The Asset Management Corporation of Nigeria (AMCON) was a child of necessity, birthed in 2010 as the defibrillator that would jolt Nigeria’s failing banking system back to life. When the global financial shock of 2008 compounded Nigeria’s margin lending, lax supervision, spectacular bank collapse problems, the result was a banking sector drowning in toxic loans. At their peak, non-performing loans consumed 37.2 per cent of Nigerian banks’ books, with bad loans reaching as high as N3.7 trillion. AMCON was modelled after successful international institutional frameworks, with clear core objectives to absorb the toxic, non-performing loans (NPLs) choking the banking sector after the 2008 global financial crisis, stabilize the financial ecosystem, and, afterwards, quietly wind up. As at November 2023, AMCON had injected as much as N2.2 trillion as financial accommodation, according to a BusinessDay Report. By these accounts, AMCON achieved its initial stabilisation objective.

A 10-Year lifespan has become a permanent address

International best practice for bad banks demands a credible sunset clause. The 2015 amendment to the AMCON Act specified a 2019 end date; the IMF recommended a credible exit strategy as far back as 2013, to ensure winding-up by end-2017, warning that the absence of a sunset provision risked fiscal exposure and moral hazard behaviour by banks.

But AMCON still lives regardless, hunting debtor that owe as much as N4.6 trillion, rolling forward obligations, and draining Nigerian banks in AMCON Levies. Banks paid N283.85 billion as AMCON charges in just the first quarter of 2025 alone, a 28 per cent leap over the previous year. Sadly, these costs are ultimately borne by customers and shareholders alike. Consequently, the question for Nigeria is no longer whether AMCON saved the banks, but whether its continued existence is saving Nigeria’s economy or merely squandering its potential.

Tenuous defence and distorted incentives

AMCON’s continued existence costs the Nigerian public greatly. Operating an expansive recovery apparatus complete with a network of private Asset Management Partners and a newly established specialized insolvency unit at the Federal High Court demands heavy institutional funding. Critics argue that AMCON has collapsed into a moral hazard. They say that by perpetually absorbing toxic corporate debt, AMCON inadvertently gestures to wealthy oligarchs that Nigeria will always subsidise their reckless commercial failures.

AMCON’s proponents cite recovered sums and ongoing stability in a volatile economy prone to oil shocks and naira pressures, arguing that without it, non-performing loans (NPL) spikes could re-emerge. But the reality on the ground suggests a revolving door of maladministration. For instance, labour unions have accused AMCON of running once-viable carriers like Aero Contractors aground due to lack of industry expertise, among other untoward reasons.

The Hek verdict

Hek thinks that AMCON is now acting as a perennial, and often poor, business manager rather than rehabilitating assets for sale. Nigeria cannot afford a permanent “bad bank.” For AMCON to truly serve the interest of Nigerians, its current management must aggressively liquidate its remaining real estate and corporate holdings, settle its outstanding obligations to the Central Bank of Nigeria, and finally enforce its own sunset. Until a firm operational endpoint is executed, AMCON risks being remembered not as the savior of Nigerian banking, but as a cautionary tale of fiscal liability, endless costs and institutional inertia. The longer AMCON stays, the more it becomes a leech to the very financial system it was meant to save.