….Says Tough to Recover Assets amidst Economic Downturn
By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The Asset Management Corporation of Nigeria (AMCON) said on Tuesday it’s tough to pay off N5.6 trillion of its liabilities in the next 10 years as it struggles to recover assets amidst economic downturn, according to Ahmed Kuru, chief executive officer (CEO) of the Corporation.
Kuru at a media parley with journalists in Lagos said dwindling economy, sliding oil prices are the challenges that face the Nigeria’s bad debt manager to recover trillions of naira owed it and other assets it acquired five (5) years ago to rescue Banks.
“To make N5.6 trillion in the next 10 years is not an easy task; that is almost the size of the national budget. There are quite a lot of challenges the country is facing today, the price of crude has gone down below $40 and has a multiple implication, and it reduces government ability to meet its commitment to some of our debtors,” he affirmed.
Kuru says companies that owe AMCON are finding it extremely difficult to repay their debts, while the values of its property assets are dropping, as result of the price of crude which has also affected the turnaround of the economy. “The economic activities of some of the businesses we are holding are currently very weak; so the ability to generate cash flow to meet internal obligations is also challenged,” he said.
According to the CEO of AMCON, the bad bank manager, has no plans to offer Nigerian Banks another bailout as a result of last year’s slide in the prices of crude, he affirmed that Non-Performing Loans (NPLs) will climb to between five (5) and 10 percent in the next two (2) years from 2.9 percent recorded at the end of 2014.
“If you say at any given time, you are going to be intervening in purchasing Non-Performing Loans, it’s more like encouraging rascality,” Kuru said.
The Corporation is funded by an annual levy on banks worth 0.5 percent of their assets which reports quoted Mustafa Chike-Obi that the charge won’t be eliminated or reduced until AMCON is wound down, probably by 2023 when 3.8 trillion naira of AMCON bonds held by the central bank mature.
Kuru also disclosed that AMCON would restructure 50 percent of its bad loans. “The next phase for us is how we sell AMCON to meet its own obligations. 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,” the CEO of AMCON added.
