By Solomon Semaka.
For the avoidance of doubt, AMCON is an acronym for Asset Management Corporation of Nigeria. AMCON is a statutory body created by an Act of the National Assembly. The bill which created the body was signed into law by President Goodluck Jonathan on Monday, July 19, 2010.
According to a press release that was signed by M.M. Abdullahi, Head, Corporate Communications of Central Bank of Nigeria quoted President Jonathan thus; “the establishment of AMCON is a reflection of the Government’s commitment to safeguard the interests of depositors, creditors, and other stakeholders in the Nigerian financial system and in doing so rejuvenate the domestic economy.”
Though the Act has undergone amendments and the latest was signed into law by President Muhammadu Buhari in August 2019. The new AMCON Act has increased the powers of the corporation to recover debts owed to legacy banks.
Abata, Matthew Adeolu of the Department of Accounting, Lagos State University, Ojo in a paper in Global Journal of Contemporary Research in Accounting, Auditing and Business Ethics (GJCRA) An Online International Research Journal (ISSN: 2311-3162) 2015 Vol: 1 Issue 2 282 www.globalbizresearch.org with the title “Impact of Asset Management Corporation of Nigeria (AMCON) On the Securitisation in the Nigerian Banking Sector” has traced the necessitating factors of the establishment of AMCON to include the accumulation of non-performing loans (NPLS) of some Nigerian deposit banks, and governmental approach towards resolving these threats to banking industry performance and economic stability. Summarily, Abata has argued that “the rationale behind the establishment of AMCON is for the corporation to purchase the toxic assets from the banks and after the purchase the banks will have “clean” balance sheet.”
It is interesting to note that AMCON was a part of a grand strategy of the Central Bank of Nigeria during the Banking Sector stabilization process that begun in August 2009. At that time, after a special audit by the Central Bank of Nigeria and the Nigeria Deposit Insurance Commission (NDIC) of banks in Nigeria, nine banks were discovered to be thoroughly distressed, below minimum capital requirements and were heading toward bankruptcy – this is a part from the mountain of accumulated non-performing loans.
Therefore, the foregoing is an explanation that the establishment of AMCON was like a stitch in time which serves nine. The establishment now under Ahmed Lawan Kuru as the Chief Executive Officer and Managing Director who was re-appointed by President Muhammadu Buhari for a second term in office and confirmed by the senate of the Federal Republic of Nigeria in December 2020 has continue to work assiduously towards the stabilization of the Nigerian economy.
Under the watchful eyes of Kuru as the CEO/MD of AMCON, as of August 2020, Kuru appearing before a technical session of the senate committee on Banking Insurance and other Financial Institutions in Abuja revealed that the total Assets Under Management (AUM) was N136.73 billion and N112.03 billion worth of propriety assets.
As a corporation that was created as a key stabilizing and re-vitalizing tool aimed at reviving the financial system by efficiently resolving the non-performing loan assets of the banks in the Nigerian economy, AMCON has acquired Non-Performing Loans (NPLS) of various Eligible Financial Institutions (EFIs) in three different phases with the top 5 EFIs representing 58.18% of all purchased EBAs. A total of the summary of number of loans acquired stands at 12,537 placing the percentage of AMCON portfolios at 100.
It is important to analyse that based on the categorization of loans by their sizes by the Loan Management Team, loans that are over N10b are referred to as strategic and the percentage of strategic loans stands at 40% of a total of 100% with the three remaining categories scrambling for the 60%, thereby making the strategic loans the greatest percentage of AMCON portfolio.
One can but only imagine if AMCON was not in place what would have become of Nigerian economy. Even as it is in place, one cannot claim that the Nigerian economy is standing with her two legs. This is because, Non-Performing Loans (NPL) reduces banks liquidity, credit expansion, slow down the growth of the real sector with the direct consequences on the performance of banks and the economy as a whole (Abata, M.A 2015).
AMCON under the leadership of Ahmed Kuru has clearly demonstrated that there is no sacred cow to be spared in the quest of stabilizing the Nigerian economy. Many prominent Nigerians have had their asset taken over by AMCON. For example, Ben Murray-Bruce as a serving senator came under the sledge hammer of AMCON in 2017, and in that same year, AMCON purchased nearly N100billion debt of capital oil and Gas owned by Ifeanyi Ubah from several commercial banks.
It is sad to note that there are over 400 obligors of AMCON that accounts for more than N4.5 trillion which is approximately 80 percent of the total outstanding loan balance of the corporation’s over twelve thousand accounts with obligors that have become recalcitrant overtime despite obvious efforts of the corporation.
There is an urgent need to listen to the counsel of Hon. Sir Jones Chukwudi Onyereri, then Chairman, Banking and Currency of the House of Representatives that “… for all institutions that want to see Nigeria get out of the current economic situation in the country to support the effort of the Asset Management Corporation of Nigeria (AMCON) to resolve the huge debt it carries insisting that its resolution was capable of rebounding the economy”.
Similarly, as a way of helping to navigate the country out of recession, a two-time former Attorney General of the Federation and Minister of Justice, Chief Kanu Godwin Agabi SAN had also called on judges in the country especially the ones that handle cases concerning the Asset Management Corporation of Nigeria (AMCON) and its debtors to pile pressure on the obligors to repay the huge debts, which he said was capable of revitalising the economy if recovered.
It is also apt to adopt one of the recommendations of a study carried out by Abata in 2015 which “recommends that AMCON should be professionally managed, have skilled resource base and devoid of political interference. Adequate funding should also be provided while overhauling the country’s bankruptcy and foreclosure laws. There should also be a robust information and management systems, and transparency in operations and processes. As noted by Klingebel (2000), “in the Philippines and Mexico, the success of the AMCs was doomed from the start as governments transferred large amount of loans that had initially been extended by the originating banks based on political connections and/or fraudulent assets to the AMCs which are difficult to be resolved or to be sold off by a government agency. Both of these agencies did not succeed in achieving their narrow objectives.”
As Ahmed Kuru settles down for a second term of five years in office, he should be aware that he carries a burden of proving once again that he is a square peg fixed in square hole and must sustain the stabilization of the Nigerian economy so as not to betray the trust the president has in him.
Solomon Semaka, a public affairs commentator writes from Abuja.
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