January 5, 2022/CSL Research
Following the expiration of a 30-day deadline today given to debtors to offer a repayment proposal to the Asset Management Corporation of Nigeria (AMCON), the debt manager has
threatened to publish the complete list of the names of individuals, institutions, and directors on its non-performing loans (NPLs) portfolio in national newspapers. Going by the information on the outstanding debtors provided by the corporation, about 7,912 debtors at most are at the risk of getting their names published should they not comply with the directive. According to AMCON, out of the total N4.4tn of the corporation’s NPL portfolio, about 350 debtors owe 83% (N3.7tn).
AMCON has occasionally released names of its debtors, with the most recent one published
in October 2018, where it published the top 105 delinquent debtors. The proposed plan to name and shame debtors in January 2022 makes it the third official time of publishing debtors’ lists. Beyond this, the corporation has also adopted other unconventional methods in the past to recover these loans, such as appointing Asset Management Partners (a consortium with specialist skills required to ensure recovery and debt resolution). The corporation also at some point formed a task force comprising the Economic and Financial Crimes Commission (EFCC), Nigerian Financial Intelligence Unit (NFIU), and the Independent Corrupt Practices Commission (ICPC). Despite these steps, the debt burden remains high.
AMCON was established in 2010 to buy the Non-Performing Loans (NPLs) of Nigerian banks to stabilise the banking system and is currently being funded by a combination of loan recoveries, contributions from the Central Bank of Nigeria (CBN), sale of assets pledged, and a sinking fund levied on the banks. Banks were initially mandated to contribute 0.3% of total assets to the sinking fund. This was further increased to 0.5% of total assets in 2013 (and 0.33% of contingent liabilities). Meanwhile, President Muhammadu Buhari recently signed the Asset Management Corporation of Nigeria (Amendment) Act, which amends the AMCON Act No.4, 2010. Among other things, the amended act extends the tenor of the Resolution Cost Fund (RCF) and grants access to the Special Tribunal established by the Banks and other Financial Institutions Act 2020.
We struggle to see the significant impact this third attempt at naming and shaming will have on the recalcitrant debtors who, over the years, have refused to pay their debts, despite having the financial capacity to do so. Meanwhile, we recall that the Managing Director of AMCON, Ahmed Lawan Kuru, at a meeting with the National Assembly in November 2021 noted that a slow judicial process was frustrating recovery efforts. According to him, over 4,000 pending court cases were challenged with a plethora of issues.
In fact, many of these debtors also prefer to engage the corporation in unending lawsuits, given their influence to elongate the judicial process. In our view, all efforts to recover these debts will always be futile for as long as many of the debtors remain “sacred cows’’ that cannot be punished.