At a recent stakeholders retreat in Lagos, Mr. Gbenga Alade, the Managing Director/CEO of the Asset Management Corporation of Nigeria (AMCON), urged the judiciary to expedite AMCON-related cases within the 60 to 90-day timeframe established by the AMCON Act. Alade emphasized that the speed of the judicial process is vital for AMCON’s success in recovering billions of naira in outstanding debts. He highlighted that there are more than 3,000 cases pending in courts nationwide, spanning various levels from the lower courts to the Supreme Court. In addressing the Senate Committee on Banking, Insurance, and Other Financial Institutions, he reiterated the need for judicial efficiency and called upon legislators to raise awareness among government agencies regarding the risks of engaging with contractors who owe debts to AMCON.
Despite facing initial hurdles, Alade reported substantial progress in AMCON’s recovery efforts, boasting approximately N2.01 trillion recovered to date, derived from a mix of cash recoveries and the sale of assets. The composition of these recoveries includes 44 percent from cash and 56 percent through various strategies like asset sales and repurchases. Nevertheless, AMCON stands at a critical juncture, with opinions split over its future; some suggest winding it down, while others advocate for its continuation in light of ongoing challenges within the financial sector. Alade raised concerns that discontinuing AMCON prematurely could revive a cycle of non-performing loans and potentially lead to bank failures, underscoring the importance of the corporation’s role in stabilizing the financial landscape.
Alade revealed a grim reality regarding the composition of outstanding debts, noting that approximately 350 debtors account for over 70 percent of AMCON’s total debt profile. Disturbingly, some of these obligors continue to live lavish lifestyles, flying private jets and securing government contracts while neglecting their financial responsibilities. He emphasized AMCON’s commitment to pursuing these debts vigorously, as allowing these individuals to evade their obligations would place an undue burden on taxpayers and risk exacerbating the nation’s already overloaded debt profile. His assertiveness underscores the corporation’s resolve to tackle recalcitrant debtors, particularly as its mandate nears its sunset date.
The retreat served as a platform for constructive dialogue, with Senator Adetokunbo Abiru, Chairman of the Senate Committee, acknowledging AMCON’s pivotal role in stabilizing Nigeria’s financial sector amid the turmoil induced by the global financial crisis of 2008. He noted that AMCON’s establishment not only provided much-needed liquidity to struggling banks but also restored public trust in the financial system, ultimately saving thousands of jobs. However, Abiru articulated the pressing need for AMCON to transition away from its current operational mode, recognizing that it cannot remain a permanent fixture within Nigeria’s financial ecosystem.
With AMCON’s lifespan extended by the AMCON Amendment Act of 2021, the organization finds itself at a transitional crossroads. The act permits a limited extension of AMCON’s operations beyond its original sunset date; however, significant challenges remain as the corporation grapples with an outstanding loan portfolio estimated at around N5 trillion. Abiru called for a concerted effort during the retreat to devise effective strategies for addressing these debts, drawing parallels with the Korea Asset Management Company, which has successfully navigated similar challenges. He underlined the urgency of recovering taxpayers’ money used for previous interventions to ensure that essential public services, such as education and health, can be adequately funded.
As discussions progressed, it became apparent that many businesses in Nigeria are facing dire economic conditions, further complicating AMCON’s debt recovery initiatives. Both Alade and Abiru indicated that a comprehensive approach is required to tackle the lingering impact of non-performing loans in order to strengthen the financial sector. The challenge before AMCON includes not only recovering debts owed to it but also finding innovative solutions to channel recovered funds into critical areas that benefit the nation as a whole. This collaborative dialogue aims to chart a sustainable path forward for AMCON, ensuring its legacy contributes positively to Nigeria’s economic recovery and growth in the long run. The retreat thus served as an essential step in reevaluating AMCON’s role amidst evolving economic realities and stakeholder expectations.
