From Christopher Isiguzo
The Managing Director/Chief Executive Officer of the Asset Management Corporation of Nigeria (AMCON), Mr. Ahmed Kuru has disclosed that the corporationâ€™s recent assessment of obligors as at December 31, 2016 identified 350 accounts with a current exposure of N2.5 trillion, representing about 80 per cent of AMCONâ€™s total obligor debt.
A statement quoted Kuru to have said this during a retreat for lawmakers in Enugu yesterday that was declared open by Governor Ifeanyi Ugwuanyi of Enugu State.
â€œAMCON has also repositioned its debt recovery approach to strengthen legal and credit restructuring units to collaborate on the aforementioned 350 accounts termed ‘defaulters,’ enhance the restructuring and turnaround team; and engage in asset tracing to enhance recovery.â€ â€œIn spite of the difficultiesâ€, Kuru said.
â€œAMCON continues to persevere in the face of adversity.â€
Providing additional insight into the challenges of AMCON, Kuru lamented that the ramifications for failure by AMCON to recover its debt, principally owed to the Central Bank of Nigeria (CBN), cannot be quantified as it goes beyond economic cost. According to him, in the last two years, AMCON debt repayment to the CBN were N456.4 billion and N517.7 billion but actual payments were N256.7 billion and N191.1 billion in 2015 and 2016, respectively.
He added: â€œThis translates to a funding shortfall of N199.7 billion and N326.4 billion in 2015 and 2016, respectively. Of this shortfall, repayment due from AMCON in 2015 and 2016 represented 42 per cent and 53 per cent while the resolution cost fund represented 58 per cent and 47 per cent in 2015 and 2016, respectively. The funding plan envisaged contribution of 70 per cent from the resolution cost fund and 30 per cent from recovery.”
â€œTo put this into perspective, AMCONâ€™s total debt obligation of N4.6 trillion represents 75 per cent of the 2016 national budget, 26 per cent of the 2016 total national debt, and 5 per cent of the countryâ€™s nominal gross domestic product in 2016. Given the current demands on the Federal Government, it is doubtful that it can afford to expense AMCONâ€™s debt in the short term.â€
Going by all these challenges of AMCON, Kuru told the lawmakers to be mindful of the proposed bill of the Nigerian Assets Management Agency (NAMA). He stated categorically that, â€œâ€¦we note that this Committee is reviewing the proposed bill of the Nigerian Assets Management Agency (NAMA) and request that the Committee also considers its impact on AMCON. Our position is that AMCON should not qualify as an agency as covered under the proposed NAMA bill since AMCONâ€™s assets were principally acquired from the banking sector for the purpose of debt resolution.â€
Earlier, the Chairman of House of Representatives Committee on Banking and Currency, Hon. Jones Chukwudi Onyereri has said the House of Representatives would not be lured into supporting any plot to lure AMCON to purchase new debts from banks.
Onyereri said the lawmakers agreed that it would not be the right decision for the country considering the state of the economy, which is on the pathway to recovery after sliding into recession.
Onyereri added: â€œWe are also aware that some economists are clamouring for AMCON to buy more toxic assets from the Eligible Financial Institutions (EFIs) in view of the very high level of the non-performing loans that are worse than the 2009 experience and far above the regulatory threshold. We wish to sound a note of warning that this Committee will not; I repeat will not support any such move; at least not at a time like this in the history of our economy.â€