Leading legal luminaries including the former Chief Judge of the Federal High Court, Hon. Justice I. N. Auta and the President of Court of Appeal, Hon. Justice Zainab Adamu Bulkachuwa have joined the campaign by the management of Asset Management Corporation of Nigeria (AMCON) in calling for a paradigm shift in debt recovery processes in Nigeria.
Such shift, according to them would act as act as panacea, if indeed the Corporation were to meet its mandate of resolving its huge outstanding obligation.
Current AMCON management under the leadership of its Managing Director/Chief Executive Officer, Mr. Ahmed Kuru upon assuming office and reviewing the challenges as well as bottlenecks inhibiting recoveries mounted a strong campaign that the current practice where habitual and recalcitrant debtors are treated with kid gloves, especially by agencies of government would not help AMCON resolve these loans before its sunset date.
According to Justice Auta, the approach to debt recovery and resolution must change at this point in the life of AMCON especially going into 2018 and beyond because the Corporation came as a child of necessity at the time it was created with all the good intentions in the world to recalibrate the beleaguered economy of the country at the time.
He added: â€œNigeria witnessed the 2007 global financial crisis, which was caused by insolvency, illiquidity, poor corporate governance and outright financial crimes. However, with the creation of AMCON by the federal government, no bank has been liquidated, depositorsâ€™ funds are safe and no bank has been subject to collection queues.
â€œThe financial crisis led to the depression in value of the securities created against these defaulting loans thereby leaving the banks with an unfortunate inability to recover their losses. The effect of such monumental exposure was that banks were unable to sustain the equilibrium of lending required to maintain a vibrant economy. This in turn led to higher interest rates and an inability to perform the bankâ€™s primary functions of financial intermediation like the pooling of savings and lending.â€
Explaining further he said, â€œIn addition to significant reduction in lending to customers, financial crisis created by non-performing loans can result in breakdown of interbank lending, which in turn leads to drastic drop in liquidity of banks and a consequent reticence or direct inability to advance loans to the broader public. Collectively, these factors create a vicious cycle resulting in a hike in interest rates; concomitant default and insolvency; volatility of currency values; a drop in investments and general stagnation of the economy among other crisis.â€
Justice Auta having enumerated the facts argued that it is extremely important for all stakeholders, especially Judges to note the correlation between bank failure, which AMCON saved, and a large concentration of non-performing loans. He added that Judges have critical role to play in the insulation of the macro-economy from fragmentation since most disputes that relate to banking, which AMCON currently shoulders are presented before them. Describing the AMCON framework as â€œextremely complexâ€ he said AMCONâ€™s goal can only be accomplished if all stakeholders, especially the entire hierarchy of the bench appreciates the fundamental underpinnings of its regime.
Lending her voice to Justice Autaâ€™s position, Justice Bulkachuwa in her own analogy argued that since the rise of the financial sector is tied to economic growth, Nigeriaâ€™s economy, the livelihood and wellbeing of the citizenry are inextricably related to finance. She said all over the world, whenever the economy goes into crisis, governments across the world intervene to stabilise the macro-economy, which AMCON did in the case of Nigeria.