The federal government says it will withhold payment to it’s contractors who are indebted to the Assets Management Company of Nigeria (AMCON) until they enter into an agreement on how to settle their debt.
Finance Minister Mrs Zainab Ahmed disclosed this on Friday at the official inauguration of Board of Directors of Asset Management Corporation of Nigeria (AMCON) in Abuja.
The Minister insisted that the government will no longer tolerate the antics of debtors who use resort to different meant to stall debt recovery.
She said: “It must be emphasised that government would not deal with debtors that have failed to honour their obligations with AMCON. The payments due to some of these obligors will be put under lien until they enter into a resolution agreement with AMCON. This is because AMCON’s debts sits on the government’s balance sheet with CBN.”
At its inception, AMCON acquired over 12,000 non-performing loans worth approximately N3.7 trillion from 22 commercial banks; and has injected N22 trillion as financial accommodation to 10 banks.
Zainab noted that “AMCON has been able to recover over N1trillion since inception to 2018 year end. Out of the recovered sum, cash accounted for 60% while non-cash assets such as properties and equity securities accounted for the balance of 40%. Over the same period, AMCON’S repayment of its indebtedness to the CBN was over N1trillion.
“AMCON’s total debt obligation to the CBN, is currently in excess of N5 trillion. It is evident that the Federal Government cannot afford to write off this debt in the short term, hence, our moral obligation to pursue obligors and recover the debts owed.
She explained that failure to recover the loans may result to serious consequences including recourse to tax payers’ money which must be avoided. For ‘ an organisation with sunset date, all hands must be on deck to provide the support required. Considering the huge portfolio of debt, no obligor must be allowed to go scot free no matter how highly placed.
The Minister added that the board will not only give policy direction but it will further boost the drive of the Corporation to recover the huge non performing debt portfolios.
“However, the need to have a formal Board cannot be over emphasised as it is the requirement of the Act setting up AMCON. You can clearly see the need to provide policy direction for the Corporation hence your appointment.
“I wish to reiterate the admonition of Mr. Boss Mustapha, Secretary to the Government of the Federation that Boards are expected to provide policy ‘direction and implementation of programmes for the achievement of mandates of agencies rather than interfere with day-to-day affairs of the agencies,” she said.
In his response, chairman of the board, Muiz Banire assured that the board will put in place a practical mechanism recover the huge debts from obligors who continue to use one trick or the other to avoid paying their debts.
while it aggressively pursue it’s assignment, Banire added that it will be done in accordance with the rule of law.
“I see some of them walking around and still doing serious business with government. We will do all within our capacity to deliver on our mandate,” he said.
For his part, AMCON’s managing Director, Muhammed Kurfi noted that while the challenge of debt may be enormous, he added that at the moment the Corporation has been able to recover N1 trillion out of a debt portfolios of over N5 trillion.
“We have been able to recover N1 trillion but we have more than N5 trillion that is outstanding. If today AMCON dispose all that is in its possession, we may be able to recover maybe N1 trillion willing buyer willing seller because the framework provides that it should be able to accommodate the N2.2 trillion because most of the assets we are holding are from the banks and they were over valued.
“So if today I sell all the assets in my possession-if there is a willing buyer- I won’t be able to recover N1 trillion. It is very important as the honorable minister recommended, those obligirs in our books must be pay.”
He, however, noted that the inauguration of the board will further boost the turnaround time for debt recovery.
“It is not an easy task but the Act has made provided for the situation that we are going through,” he added.
