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AMCON, Bank lending and jobs – 2

By Dele Sobowale

“Why is it that the principles of economics which work anywhere else in the world don’t work in Nigeria”, asked President Ibrahim Babangida, IBB, out of exasperation in the 1990s. In my letter to the Guardian Editor, my reply to IBB, was simple. The principles of economics presumed that the people adopting them are reasonable and honest.

Nigerians are neither reasonable nor honest”. We still are the way we were during IBB’s government. AMCON is another testimony to the fact that measures and policies which have produced outstanding results worldwide fail in Nigeria because those placed in charge collude with dishonest people to guarantee failure.

The Assets Management Corporation of Nigeria, AMCON which was established in July 2010, when trillions of bank loans became toxic, similar to the Troubled Assets Relief Programme, TARP, in the US, during the global financial crisis, has failed to turn the fortunes of Nigerians around because the funds provided for AMCON operations have again fallen into the hands of the same dishonest people who made AMCON inevitable in the first instance.

Consequently, banks have no funds to lend, domestic investment has come to a halt and jobs are not being created – while government officials lie about it. The Nigerian Government is one organization which operates according to the counsel of not letting your right hand know what your left hand is doing. A sign should be placed on the front entrance of every Ministry or government agency saying Situation Normal, Everything Fouled Up, SNEFU. Secrecy is even strictly maintained between agencies and their supervising Ministries.

*CBN Governor, Sanusi Lamido

Many readers, with not even long memories, would recollect how one Minister announced that his Ministry had created 1.3 million jobs. When I raised an objection, it turned out that the figures originated from a bank supervised by the Minister. When contacted, the bank reported back that only 300,000 jobs had been created. Even that claim could not be substantiated. Lying, with a straight face, is rapidly becoming the trademark of many officials of the Jonathan administration.

AMCON is the latest of the many agencies of government which we establish for the accomplishment of a lofty aim but which soon become bogged down in corruption and   endless probes.

Meanwhile its original mission, which is to buy toxic loans from banks, and to negotiate with the debtors, more like dead beats, to accept more lenient repayment terms, on condition that they will then repay, as and when due, for the funds to be returned to the pool for lending to new ventures. Almost all the toxic loans were incurred by large companies owned by people close to the corridors of power.

Small and medium scale enterprises accounted for next to nothing among the toxic loans for two reasons. While banks, for reasons soon to be disclosed, don’t waste time perfecting the loan agreements with small scale enterprises and very speedily move to recover their loans when necessary, they seldom move against the “billionaires” whose companies have taken loans.

Yet, it is the BIG businesses which continue to attract loans from banks. Furthermore, on account of deliberate corrupt practices, loans to habitual bad dead beats are never fully perfected. Thus when they default, the bank has a tough time collecting.

Another variation of the scam is for the directors of the banks, especially the Managing Directors, to lend to their own companies, or those of their relatives. When those loans become toxic nobody can collect. That was made clear in the Cecilia Ibru case and the same pattern is repeating itself in all the cases now going on in court. Invariably, funds, meant for lending to hundreds of thousands of honest small business people, are taken out of the banking system by a few people who don’t pay back.

AMCON became necessary because the Central Bank of Nigeria, CBN, under Professor Soludo, allowed banks to siphon funds out of the banks for illegal and corrupt practices. It is only now that the CBN and the National Assembly, which should have been performing their statutory oversight and supervisory functions, are now paying attention. That is akin to bolting the ranch gate after all the cows have fled because, once again, public funds have, through deliberate corrupt practices have been allowed to disappear into private non-productive pockets.

Unlike the Troubled Assets Relief Programme, TARP, which had helped to sanitise and stabilize the US financial markets, AMCON has made very little progress in that regard and is even prone to deepen the problems in the future. While TARP had recovered $256 billion by August of 2011, more than the $245 billion which the US government pumped into it, AMCON has failed to recover up to half of the taxpayers’ money that was devoted to that copy-cat measure.

The reason is not hard to discover. While the managers of TARP, without exception, were people with names and integrity to protect, the same cannot be said of their Nigerian counterparts. And, while TARP, operated in a country with respect for institutions, ours is a nation in which persons selected to manage institutions, especially those controlling large sums, regard their appointments as their own share of the national cake.

No Nigerian institution, especially where large sums are involved, had lasted for more than two years without a scandal erupting. AMCON is now under suspicion of a major scandal involving high profile debtors who have also been involved in serial questionable financial transactions.

Nothing points to deliberate collusion more than the list of those who were recently blacklisted by the CBN from obtaining bank credits until further notice. Let us focus on two, whose names have appeared on virtually every scandal in this country in the last five years. This is vital because every professional banker or financial expert knows that one of the principal criteria for granting credit is character –which has many elements. But, the cardinal attribute is well-established integrity.

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