The recent announcement by the Asset Management Corporation of Nigeria (AMCON) that, as at first quarter of this year, it had recovered N1.1 trillion from bad loans is a significant development. This figure which represents the total sum the “bad bank” has recovered since its establishment in 2008 is a clear improvement on the N1 trillion recorded in 2019 and a testament to its relentless and focused efforts to manage the non-performing loans under its remit in a way that protects and enhances the economy.
The challenges ahead are still significant, no doubt. AMCON still has a lot of work to reduce the mountain of bad debts, much of which was owed by rich and politically connected persons who have made some kind of career out of raking up debts. But the announcement of another N100 billion recovered is very encouraging news amidst the economic uncertainty that has characterized this tempestuous year defined by the ravaging impact of Covid-19.
In spite of numerous disruptions to business activities over the Covid-19 pandemic, AMCON has worked hard to keep its momentum. For instance, the corporation announced that it recovered between N5 and N10 billion during the first phase of lockdowns.
Though AMCON’s Managing Director, Ahmed Kuru has acknowledged that the pandemic has disrupted many aspects of debt recovery such as legal processes, physical visits to assets and valuations, he has expressed confidence in the capacity of the corporation to adapt to the crisis and sustain the progress recorded so far by the corporation.
Though firm and focused on protecting the interest of the nation, AMCON’s strategy is not oblivious of the real human and economic impact of the pandemic. As Kuru explains: “AMCON continues to work with cooperative obligors to recover their debts while taking into account the realities brought on by the pandemic. For example, a business owner who has been following our agreed payment plan diligently may all of a sudden run into difficulty because his factory is closed down over the pandemic. We will work with such an individual because we would have been monitoring the situation and would be fully aware of the individual’s limitations despite his/her willingness to pay. In such a case we might give them some respite and a moratorium of about six months. And if in six months this virus doesn’t go away, we may have to extend it.”
But the corporation makes a clear distinction between cooperative and uncooperative debtors. And it applies a different approach for stubborn debtors, those who were notorious for evading payment even before the pandemic. As Kuru puts it: “There are some who were hiding even when there was no pandemic,. So, you have to continue pursuing them. If it is their assets or anything you can hold on to, you seize it. Basically, you use everything to pursue them, even the courts.”
The steady pace of recoveries is proof that these strategies are working. It is obvious that AMCON is taking the setbacks brought on by Covid-19 in its stride and pressing on with its very important mandate. This capacity to adapt to change and be flexible in its strategies has been a distinctive feature of AMCON under its current leadership.
The Kuru-led management has been known to deploy various measures to work around the challenges that come with its mandate, most notably, the stubbornness of Nigeria’s billionaire debtors. From dialogue and negotiation to harsher measures like naming and shaming and inevitable property seizures, AMCON has been doing whatever is smart to get debtors to pay in addition to nursing businesses under its receivership back to profitability.
It is noteworthy that AMCON has facilitated the timely rescue of numerous troubled businesses, thereby contributing to the survival of critical companies along with jobs. Some of the prominent names that have been placed under AMCON receivership over the years include Delta Steel, Gateway Portland Cement, Daily Times as well as aviation giants like Aero Contractors and Arik Air which have been under AMCON’s receivership since 2016 and 2017 respectively.
At the time AMCON took over Arik Air, the airline’s debt was estimated at over N375 billion. Aero Contractors which is one of the oldest airlines in Nigeria was troubled by a debt of over N20 billion at the time of its takeover by AMCON.
With the aviation industry being one of the sectors worst hit by the Coronavirus, AMCON is keeping a keen eye on developments in the overall health of the sector which represents eight percent of its restructuring portfolio.
In this respect, the corporation has asked the Federal Government to provide bailout funds for the aviation sector in order to save the sector from total collapse. AMCON’s Executive Director, Operations, Aminu Ismail has explained that the bailout is necessary to recover operational losses caused by the pandemic, save jobs, overhaul equipment among other measures.
But AMCON’s intervention is far from sentimental. It has cautioned that the proposed bailout should not be used to resuscitate airlines that had stopped operations before COVID-19 forced planes off the skies but should be directed at active aviation companies with large labour forces and who carry the most passengers in the country.
AMCON’s resourcefulness in the midst of a crisis has already been reflected in the innovative management of airlines under its receivership. For instance, at the start of the lockdown, when commercial flights were suspended, both Arik Air and Aero Contractors announced that they were making their fleets available for government emergency, humanitarian and charter flights during the pandemic. The deployment of these fleets during the pandemic was not only of significant value to the country during a crisis, it was also hugely beneficial to the health of the fleets, based on the advice of aviation industry experts.
Acknowledging the pandemic’s interruption of air travel globally, experts have warned that aircraft that stay parked for long periods suffer the risk of easy deterioration of their mechanical parts. Therefore, keeping fleets of Arik and Aero active during the pandemic implies that their aircraft will be inspected and other forms of maintenance carried out, thereby guarding against the deterioration that threatens airline fleets all over the world during the pandemic.
This kind of resourcefulness justifies the calls for government intervention in the aviation sector. It also highlights the prudent mindset that led Ahmed Kuru to suggest that Arik Air be converted to a national carrier instead of the more costly idea of starting a new national carrier from scratch.