The former Chief Executive Officer of the Asset Management Corporation of Nigeria (AMCON), Mr. Mustafa Chike Obi, has disclosed that the creation of the corporation did not envisage complete recovery of the bad loan acquired.
Even then, he said that despite the huge value of the outstanding debts, the corporation had recovered almost the amount staked on the lenders’ bad loans. Chike-Obi, who is the Executive Vice Chairman at Alpha African Advisory, disclosed this at an interview in Lagos last week. He said: “Even from the point of establishment, there was never a time that major stakeholders thought that all the bad debts acquired by the Assets Management Corporation of Nigeria (AMCON) would be fully recovered.
The debt management experts explained that the corporation in simple terms paid 30 kobo for every One Naira debt, and has recovered close to the same amount. He said: “We never thought the AMCON debt will be recovered fully. We paid 30 kobo in a Naira for the debt, and we have recovered close to 30 kobo in the Naira.
“That is what we paid for it. We did not pay N100. We didn’t pay one Naira for every one Naira debt, we paid 30 kobo and we have recovered close to 30 kobo.” He made the clarification in response to critics who predicted that the debts will never be recovered. However, available records show that as at October 23, 2019,
AMCON’s recoveries amounted to N759billion. This amount includes cash and seized properties worth N264 billion out of reported debts of N5trillion. Analyst have estimated that the debts could rise to N6.6trillion by 2024 because of its N4.5 trillion indebtedness to the Central Bank of Nigeria. It should be recalled that about 350 Nigerians are said to be responsible for more than 80per cent of the N5 trillion debt profile of AMCON.
AMCON was set up by the Federal Government in 2010 to acquire non-performing loans from banks in order to ensure the viability of the country’s financial sector. The Federal Government (FG), through the operation of the Central Bank of Nigeria, conceptualized the idea for the establishment of a body that would prevent financial crisis in the country. The apex bank said the carrying value of AMCON’s liabilities increased from N4.53trillion at the end of June 2018 to N5.43trillión as of December 2018, arising from the corporation’s investment of N898.45billion in Polaris Bank Ltd.