The House of Representatives yesterday in Abuja expressed serious concern over the quality of loans that were acquired by Asset Management Corporation of Nigeria (AMCON) from Eligible Financial Institutions (EFIs) in the country and called on the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance among other regulators to immediately ensure that all wrongly declared loans by commercial banks are clawed back to enable AMCON cover its funding gap.
A statement from AMCOM spokesman Jude Nwauzor said the House also stated that loans without proper documentation or which are unrecoverable due to packaging or state of the collateral should be reloaded back to the Financial Institutions since they are now making profit.
This declaration was made when the House Committee on Banking and Currency led by its Chairman, Hon. Sir Jones Chukwudi Onyereri JSP, visited AMCON’s head office in Abuja as part of its oversight functions to review the Corporation’s 2016 budget performance.
During his welcome remarks, Mr. Ahmed Kuru, Managing Director/Chief Executive Officer of AMCON while welcoming the Committee in company of its top Management Staff, informed the Committee that for AMCON to survive and meet its obligations, the root causes of some of the loans that ended with AMCON need to be revisited.
Kuru reiterated the fact that AMCON was dealing with obligors that have the financial capacity to engage AMCON from court to court in their plot to evade repayment and thereby sabotaging the effort of the federal government to resuscitate the economy, adding that there was need for all the relevant government agencies especially the legislature to rally round AMCON because the failure of AMCON would mean that the gains Nigeria recorded in 2010/2011 when AMCON was created would be lost and the economic difficulty, which was avoided then would eventually befall the nation. He however said that the continued interest and support AMCON has received from the House members has reassured him that AMCON would realize its objectives.
At the end of the exercise, Hon. Onyereri who said the committee was satisfied with the renewed vigor with which the present AMCON management was pursuing its obligors however stated that there was need for the government to review some of its processes and be mindful of how it relates with AMCON debtors. According to him, giving contract to individuals or companies that are heavily indebted to AMCON to say the least defeats the whole essence of creating the special agency in the first place.
Hon. Onyereri said, “The Committee observed that it will not be desirable for the Federal Government to continue to patronize individuals and companies who are hugely indebted to AMCON while those companies on the other hand, refuse to repay their debt. We are therefore calling on the Federal Government to direct the Ministry of Finance to deduct at source, the value of debt owed by such debtor companies or individual with expected receivables from the Federal Government. We also suggested that it may be necessary for such debtor companies to obtain clearance from AMCON as a prerequisite for Federal Government patronage in the future.”
The Committee, which said it was willing to support further legislative reviews of the AMCON Act as long as it would enhance the operations of the Corporation also noted that the 6 per cent interest rate charged by the CBN on cost of funds should be reviewed downwards in order to lessen the excessive burden on AMCON, adding that such a move will help to bridge the funding gap.
On the recent takeover of Arik Air by the Federal Government, the Committee said the Federal Government should among other steps also consider an outright sale of the airline and its assets in order to prevent further wastage of public resources as there are no reliable statistics to show the impact of the services provided by the airline, stating that such a move would influence other smaller and efficient airlines to grow.