When the Asset Management Corporation of Nigeria (AMCON) was set up, the whole idea was to provide financial stability. Looking back, the corporation says it has succeeded in fulfilling its mandate, by and large, as it was able to avoid systemic crisis, safeguard depositors’ funds and guarantee the continuity of the financial system in the country.
“We have provided the financial stability, supported the institutions in the last five years for engaging AMCON. And in the process, we have been able to negotiate and structure more 50 percent from the bad debts we have purchased,” Ahmed Lawan Kuru, managing director, AMCON, told journalists in Lagos recently.
During the banking crisis when AMCON intervened, it raised bonds, paid traditional loans from the banks and provided the financial accommodation on those bonds. However, the corporation is now faced with the challenge of redeeming the bonds.
According to Kuru, the challenge now is how AMCON would meet its own provision because it has more than about N5.6 trillion to pay.
“How do we do it? Based on the financial model we have, through the banking sinking funds which was arranged for earlier this year, the banks have guarantee to support the sinking fund to about 70 percent through provision of zero percent of the balance sheet. The 30 percent is supposed to be the recurrent. It was those loans we purchased,” he said.
He added that their concern now is how to recover, either through restructuring or outright sale of assets, in order to meet their financial obligations of making N5.6 trillion in the next 10 years.
At the beginning when AMCON started business, it was able to dispose some of assets. In the past three years alone, quite a number of assets have been disposed – properties, shares, etc. In the last four years when the market was booming, quite a number of assets held by AMCON were a profit to the market.
“But now we are saddled with some of those assets that are very hard to be disposed. The economy is just picking up, we are challenged with an economy that has low purchasing power, challenged with judiciary process that is very slow and those trying to abuse court processes. We are also challenged by the aftermath of the elections. All these factors affected our operations for 2015. For us it is an opportunity, we are trying to change our strategy because the initial strategy was to provide financial stability across the institutions,” Kuru said.
“We will continue to work against some of the big people that have taken our money. Every debtor will be held responsible for his deeds. Our next phase is, how does AMCON meet its own obligation? Running 13,000 businesses is not a small thing, because even if you discount that and you say let me take 30 percent or 4,000 of those businesses scattered all over Nigeria, if we sit down and restructure those businesses, it is enough to even jumpstart this economy and those are businesses that at one point or the other were doing very well. So, just a question of sitting down with some of them and see how to restructure them and bring them back to life,” he added.
HOPE MOSES-ASHIKE
