AMCON can adopt global standing instruction of CBN to fast track debt recovery — Stakeholders


By Kayode Tokede

Stakeholders in the financial sector have expressed that Asset Management Corporation of Nigeria (AMCON) can adopt the Central Bank of Nigeria global standing instruction to speed up its debt recovery and sustained the nation’s economy.

With operational guidelines on global standing instruction – Individuals, banks were given the power to debit loan and accrued interest due from bank accounts of loan defaulters across the Nigerian banking system.

The issued guideline that commences August 1 aimed at reducing non-performing loans in the banking sector and to monitor chronic loan defaulters.

The Managing Director/Chief Executive Officer, AMCON, Mr Ahmed Kuru had reiterated the fact that if at sunset AMCON is unable to recover its outstanding huge debt of over N5trillion, the debt burden would automatically become the debt of the Federal Government for which taxpayers’ monies will be used to settle in the long run.

The Corporation is a body established by the Act of the National Assembly of Nigeria in July 2010 with an intended 10 years lifespan.

Stakeholders who spoke with Nigerian NewsDirect noted that AMCON needed to be aggressive in its debt recovery, noting that the new guidelines by CBN is the latest method  the Corporation can adopt.

A former minority leader in the house of representatives, Dr. Wunmi Bewaji in a chat with Nigerian NewsDirect on Tuesday, said, “A lot of AMCON debtors have huge deposit in their bank accounts. Everyone including the CBN and FG are looking at the money. This money can be attacked by the government from debtors account.

“AMCON can sell debtor collateral used to collect the loan and realize the credit. Also, I think AMCON can securitize these loans, take it to Nigerian Stock Exchange and sell it to Nigeria- I think that will solve the problem that will remove the hand of government from taxpayers.

“Securitization is the best possible means that would remove the hand of government from debt recovery in this country.”

Bewaji who is also finance expert suggested that Nigeria needed an agency that its duty is to hold government assets recovered from debtors and dispose it.

“Even when EFCC recovers stolen funds from corrupt individuals; it is not EFCC that will be selling those assets. It is moral bankruptcy and I have not seen any country that does that except Nigeria. Nigeria should have a national asset commission that tends to handle government assets and that agency would have the power to dispose government assets. At the process of selling these assets, it is backed by transparency and the law.

“I’am only trying to contact EFCC operations to AMCON duty on assets recovered.”

Reacting also, the Chief Economist/Head of Research, Pac Research, Mr. Moses Ojo, said, “The tenure of the current AMCON will end by 2021 and the law that set up AMCON in the first instance to deal with debtors.”

According to him, AMCON should start planning on transferring all recovered properties to the federal government.

He also suggested that, “Another way to go about debt recovery before 2021 is also to use the combination of security agencies to recover those loans.

“But you know we’re in a democracy. The cases are in court and since it’s in the court and AMCON has nothing to do about it.

“Another way is for the executive to have a rapport with the judiciary so that they can pass judgement in time for AMCON to recover these loans faster.

“That could have been an option but that policy also has it own flaw because when it is decided in the law court.

“The CBN now does not have power on a contractual obligation between an individual and a banker. That policy has to be tested in the court of law first in other to be sure of efficiency. For individual, the policy must work but for corporation, most especially Limited liability companies, it might be contested in court.”

Speaking at the first seminar for AMCON Receivers/Receiver Managers in General Enforcement recently,  Dr. Dr Francis Agbu SAN, at the Senior Partner, Lexavier Partners who was also represented by Mr Mohammad Sani Umar described receivership as the most effective debt recovery tool within the current insolvency/debt recovery regime and challenged AMCON to leverage it to the maximum to help Nigeria especially now that the federal government needs a lot of money to bridge Nigeria’s financial challenges that have been heightened by the outbreak of the dreaded coronavirus pandemic.

He said, “Receivership, as a debt recovery strategy, is arguably the most effective debt recovery tool within our current insolvency/debt recovery regime. This is primarily because of the control, which it gives to the debenture holder/creditor over the assets, or the assets and business of the debtor company. By virtue of section 393(4) of CAMA, upon appointment of a Receiver and Manager, the powers/control of the directors over the debtor company become immediately suspended. Even where the Receiver is not empowered to act as Manager, he retains executive control over such portion of the company’s assets, which have been charged.”

Narrowing down to how AMCON can apply the powers of receivership, the senior advocate of Nigeria added, “With respect to AMCON Receivership, the AMCON Act has further extended the powers/rights of AMCON-appointed Receivers beyond the scope of CAMA and the general principles on receivership. Firstly, pursuant to Section 48(3) of the AMCON Act, the Receiver’s powers to assume control over the assets of the company is not limited to the assets, which have been charged under the Eligible Bank Asset (EBA), but also included unpledged/uncharged assets.

“This extraordinary provision bestows a far-reaching advantage on AMCON in the realisation of outstanding EBAs by enabling AMCON to sustain maximum pressure on the debtor company (including its officers and shareholders) and increasing the pool of assets from which AMCON may realise the indebted sum.”