By Obinna Chima
The Asset Management Corporation of Nigeria (AMCON) has put the total amount of recovered debt as of the end of 2017 at N740 billion. This is just as the corporationâ€™s 2017 results showed that its loss position reduced significantly by 90 per cent to N16.41 billion in 2017, compared with the N164.94 billion recorded the previous year.
The Chief Executive Officer of AMCON, Mr. Ahmed Kuru disclosed this during an interactive session with journalists in Lagos yesterday.
Kuru pointed out that the corporation currently was currently in possession of a lot real estate and some other forms of assets.
He said: â€œWe have disposed some financial assets, which also included three banks. We are in the process of divesting our interest in Peugeot Automobile Nigeria (PAN).
â€œThis is in addition to quite a number of small businesses that we had intervened and disposed.â€
He put the value of AMCONâ€™s intervention in the agriculture sector at about N1.7 trillion.
â€œThe structure of AMCON at conception was that, there was the assumption that those loans that were purchased would be restructured and liquidity provided so that new life would be given to some of those businesses.
â€œUnfortunately, a substantial part of businesses that were restructured and funds injected in the past, the performance level is less than 10 per cent. â€œLike I said earlier, there was the assumption that if you transfer the loans from the banks to an asset management corporation, you will be able to restructure.
â€œBut again, we forgot that some of those facilities were bad in the books of some of those financial institutions,â€ he explained.
AMCONâ€™s financial statement also showed that its gross earnings grew by 22.6 per cent, to N342 billion in the year under review, from N279 billion, just as its total assets reduced to N822 billion in 2017, from N1.131 trillion. The corporationâ€™s interest revenue increased by 21 per cent to N42.56 billion, while its net trading gain surged to N22.86 billion.
The results showed that inflow from the banking sector resolution cost trust fund dominated the gross revenue at 62 per cent, while the corporationâ€™s revenue from the aviation sector declined by 51 per cent due to a slowdown in activities in the sector in 2017.
Commenting on the results, the AMCON boss said: â€œAs we all know, AMCON was not set up to make profit. We are not a profit-making organisation. Basically, we are a resolution agency.
â€œThe corporation has done very well in terms of what its mandate was, which is to bring financial stability.
â€œWe have started seeing a situation where our excess loss position is gradually reducing.Â Â So far, we have recovered an average of about 37 per cent of what we were supposed to recover.â€
Furthermore, he argued that in other countries where asset management corporation are also operational, the highest such institutions have done in terms of recovery is usually about 50 per cent.
â€œSo, if you gauge what we have done against what is obtainable internationally, you will see we are doing better. For AMCON to be performing, the economy must also be growing.
â€œIf the economy is doing very well, some of those businesses that are defaulting will also be doing very well. If the economy is not doing very well, then those underlying businesses would also not be doing very well,â€ Kuru explained.
He pointed out that the corporation was still holding a substantial amount of real estate assets due to the economic situation and low level of activity in the real estate market.
â€œIf we sell them today, we are going to record a lot of losses. So, we are holding them expecting that when the economy picks up, the real estate market would also start booming and then we would be able to quickly sell.
â€œIf we dispose them now, we might not be able to recover the value,â€ he said. According to him, AMCON is currently working with the Judiciary and the legislature to see areas of the AMCON Act that can be amended.
â€œThe National Assembly has been very supportive. So, we are trying to see how we can have a Special Tribunal where we can have some specific High Courts and Judges that are known with high integrity, so that our cases would be on the fast track.
â€œWe have now decided to change our strategy from restructuring and resolution to recovery. Now, when we confiscate the asset, we look for buyers.
â€œThat is because we are almost approaching our sun set period, which is 2023. If at this stage we still have a lot of properties that we have foreclosed on, when is it that we are going to do that.Â Â Some of them donâ€™t have ability to repay, while some have moved to other businesses. So, the only thing left for us now is to change our strategy in terms of recovery.
â€œThat is why we are putting a lot of efforts on our Asset Management Partners. We have less than 350 obligors that account for more than 80 per cent of our outstanding liabilities.
â€œSo, if we can focus on the 350 and we can achieve 40 per cent recovery, that would take us above the global standard for asset management corporation,â€ he added.