2017 was a remarkable year for AMCON. Under the leadership of Ahmed Kuru, the institution’s interventions transformed many critical businesses that were on the verge of collapse to success stories and saved thousands of skilled jobs. The corporation’s promotion of local industry saved the nation scarce foreign exchange, improved ease of doing business and strengthened and impacted a wide-ranging of critical sectors of the nation’s economy. From aviation, banking and the auto industry, AMCON’s impact was deep and profound. While it faced several legal roadblocks from recalcitrant debtors in pursuit of its mandate to recover bad debts, AMCON did a good job and returned several badly managed companies that it had taken over to profitability and efficiency.
Take AMCON’s intervention in the ailing airline industry and the impressive turnaround stories of the country’s two biggest airline companies – Aero Contractors and Arik Airlines – for a start.
In 2016 when AMCON took over Nigeria’s oldest aviation company that commenced business in 1959, Aero Contractors, the airline was literally hanging on life support. It was neck-deep in debt and lacked funds to run its operations. Most aircraft in its fleet were non-functional and in serious need of maintenance. In addition, the labour unions were agitated because it looked unavoidable that employees in the company would lose their jobs.
In February 2017, AMCON appointed a competent management team to run its operations and reposition the company on the lines of safety, comfort and profitability.
Today the state of the company has changed dramatically for good. The airline has not only successfully rebuilt its Maintenance, Repair and Overhaul (MRO) facility but fit it with thecapacity to conduct C-Checks. This makes Aero Contractors the first and only airline in Nigeria and the West African region to boast of such capacity. This is very significant. C-Checks are high-level maintenance checks that are performed on aircraft approximately every 20–24 months or a specific amount of actual flight hours (FH) or as defined by the manufacturer. The maintenance check is extensive and requires inspection of a large majority of the aircraft’s components and takes about 6,000 man-hours.
The airline made history in the aviation industry on January 4, 2018by successfully carrying out its first C-Checks on a Boeing 737 Aircraft using its facility. The facility has thecapacity to serve other airlines and is projected to save Nigerian Airlines up to N2.85bn per annum. The economy is also estimated to retain N20bn annually as a result.
Aero has also expanded its fleet, added more routes to its operations and is fast regaining its old glory as of the reliable airliners in the country. Thanks to AMCON’s intervention. Capt. Ado Sanusi, the Chief Executive Officer of Aero Contractors called AMCON’s intervention “a blessing”.
Next is the impressive story of Arik Airlines. When AMCON came to the rescue of the once thriving airliner that at some point accounted for about 55% of the national load in the country and employed over 2600 staff, it had a heavy financial debt burden that threatened to ground its operations. The company was going through difficult times owing to bad leadership and financial mismanagement. As a result, the airline was heavily indebted to both local and foreign creditors. Its fleet size had reduced drastically.
In May 2017, AMCON injected N1.5bn Into Arik Air to get the airline back into operations. This happened three months after it took over the debt-ridden airline. The funding enabled the airline purchase needed parts and pay off some debtors, as well as customers who were owed by the airline.
It is generally believed that the takeover of the airline by AMCON saved it from going under and secured over 2600 jobs that would have been lost if Arik had stopped operations. Many in the industry said that AMCON’s intervention was timely. Industry experts attest that without its intervention, the airline would have folded up within weeks. The corporation’s intervention is helping to restore confidence once again from stakeholders and business partners. As at date, the airline has been able to source spare parts. It now operates a fleet of over 15 airplanes and passenger numbers have improved to over 3,000 per day.
Even though Arik Air continues to have problems such as delayed flights and pay disputes with some categories of staff, there is no doubt that it owes its continued survival and improved prospects to AMCON.
The strategic role of AMCON in the revival of Aero Contractors and Arik Airlines has helped in great measure to bring stability to the country’s airline industry. It has helped to reposition the companies on the path of growth and profitability, saved jobs and laid the foundation for improved technical competence.
In the banking sector, the corporation successfully sold Keystone Bank in March 2017 to a consortium that comprised Sigma Golf Nigeria and Riverbank Investment Resources Limited as the new investors in Keystone Bank. Keystone Bank, previously known as Bank PHB, was among the three banks nationalized by the CBN in 2011, after failing a stress test conducted by the apex bank. The conclusion of the bank’s sale secured the jobs of about 1,753 employees spread across a network of 154 branches.
In the manufacturing sector, AMCON in 2017 concluded all processes required for the sale of Peugeot Automobile Nigeria (PAN) Ltd, a local car assembly joint venture that it acquired in the wake of the banking crisis to Aliko Dangote in alliance with Kaduna and Kebbi states. What is outstanding is the approval of the Central Bank for the sale to be executed.
PAN, a Nigerian vehicle assembly plant located in Kaduna state, has PSA Peugeot Citroen as its technical partner with a capacity to assemble 90,000 cars a year. The automaker is worth over 15 billion Nigerian naira ($49 million) according to its last valuation. AMCON took over PAN after buying up its debt and converting it to equity.
The potential sale of PAN to Dangote and his partners Kaduna and Kebbi state has many strategic benefits for the economy. The sale and revival of business activities at the plant will help secure jobs, catalyze the local manufacturing industry and help conserve foreign exchange.
These success stories have been possible due to the focused and bold leadership of AMCON’s management, led by Managing Director, Ahmed Kuru. Since assuming Kuru has in the last two years confronted the difficult task of debt recovery and revitalizing businesses with greater commitment, determination and vigour.
From proactive diplomatic engagements/negotiations with cooperative obligors, aggressively going after powerful and recalcitrant ones, securing court judgements and taking over their assets, AMCON under Ahmed Kuru has demonstrated a strong and commendable capacity to deliver on the institution’s mandate.
Overall, AMCON has helped to strengthen the financial system by recovering N716.1bn of the N3.7tn government used to purchase 13,000 bad loans and N2.2tn injected into 10 banks to forestall imminent collapse of the financial sector in 2010. This is a far cry from the big figure, but still impressive considering the tough economic climate and peculiarities of the Nigerian socio-political context.
However, because debt recovery is not a pleasant task in any clime, AMCON’s story is not all sweetness and light. One of the most difficult is the resort by recalcitrant obligors to unending court litigation to stop foreclosure on their assets. The corporation currently has about 3000 cases instituted against it in courts across the country. The cases are frustrating and delaying AMCON takeover of obligor assets worth N2.7tn.
Considering the clear national and economic benefits of AMCON’s work it is important that stakeholders in the judiciary, political office holders and all those who mean well for the country support the corporation to deliver on its mandate.
Cletus T Adole
Adole is a public policy analyst based in Lagos
