Business

Kuru: Govt shouldn’t do business with those who can’t keep commitment

Ahmed Lawan Kuru, the incumbent Managing Director/ Chief Executive Officer, Asset Management Corporation of Nigeria (AMCON), is a career banker with professional experience spanning nearly four decades across investment banking, among others. Looking back at his first five years as AMCON boss, he spoke with the media on the challenges of managing the Corporation and sundry issues. SUNDAY OJEME reports

 

First of all, accept our heartfelt congratulations, for completing your first five years as AMCON MD/CEO and your reappointment for a second and final term of five years. This also coincides with a decade of existence of the Corporation. These, without any doubt, are great achievements.

 

Thank you so much. The media has been there for us too as reliable partners in progress and please note that we do not take that sort of support for granted. We are very appreciative of the support.

 

As part of your experience, would you say the rationale behind the enactment of the AMCON Act and establishment of the Corporation has been justified?

 

Yes, the rationale behind the enactment of the AMCON Act and establishment of the Corporation has been justified. Recall, prior to the establishment of the Corporation, Nigerian economy was in a dire state.

 

There were foreign portfolio withdrawals of credit lines and investment from Nigeria; the stock market also collapsed, leading to loss of about 80 per cent of its value and the banking industry crisis deepened due to poor risk management that led to increase in the non-performing loans (NPLs) of the banks as a percentage of industry loans. At a point in 2009,

 

NPLs as percentage of all bank loans was as high as about 37.25 per cent. I salute the courage and the wisdom of the Central Bank of Nigeria (CBN) for quickly intervening by proposing to the National Assembly the need to set up an Asset Management Corporation to stabilise the economy, which was the global trend at that time.

Could you share the success of AMCON thus far?

 

Like I said, setting up AMCON is a blessing to the economy of this great country. Despite the lingering economic challenges and deliberate tactics of some recalcitrant obligors, the Corporation has recorded quite a lot of successes. In the first place, we supported so many businesses immediately after the global economic crisis. Some of them are doing well now. The financial institutions were equally supported to avoid a systemic collapse.

 

Some banks are operating today due to AMCON’s intervention in the industry. In terms of recoveries, so far, we have made a total recovery of above N1.2 trillion. We have sold assets worth about N500 billion and have resolved close to 5,000 Eligible Bank Assets (EBSs).

 

The Corporation has paid over N2 trillion to CBN. The fundamental objectives for the establishment of AMCON was to rescue commercial banks and some underlying strategic businesses in Nigeria from the brink of collapse in the aftermath of the global financial crises of 2008 through acquisition of non-performing loans and to dispose off the underlying assets in the most profitable manner.

 

AMCON also had the mandate to recapitalise the banks and to recover the debts, using the various resolutions mechanisms created under the Act, which, without mincing words,

 

I can tell you have been executed effectively. As at today, AMCON has achieved the first mandate of purchasing NPLs and providing liquidity to the commercial banks. We are currently focused on the second and most difficult phase of recovery and restructuring of the bad loans.

 

Recall that AMCON acquired over 12,000 NPLs worth N3.7 trillion from 22 banks and injected N2.2 trillion as financial accommodation to 10 banks in order to prevent systemic failure.

 

As a result of this intervention, our current liability with CBN is around N4.7 trillion, while the sum of N2 trillion had been repaid so far. In the area of supporting businesses, AMCON has also done very well, especially in the aviation and manufacturing sectors. Our intervention efforts in Arik Air, with the support and collaboration of the Federal Government, did a great service to the growth of the sector.

 

A similar intervention in Aero Contractors saved the airline from collapse. As a matter of fact, the Nigerian Civil Aviation Authority (NCAA) certified Aero, which is under AMCON receivership, to commence C-check maintenance services on Boeing series in Nigeria.

 

This is a com    mendable feat in Nigeria’s aviation industry and there are several other companies that we have saved. Again, in an attempt to focus our resources on the recovery mandate, we have identified about 6,000 loans with outstanding balances below N100 million, which constitute only 20 per cent of our current portfolio.

 

This portfolio has been outsourced to debt recovery agents under the Asset Management Partners (AMP) scheme, which has created huge employment opportunity for others. This has enabled the Corporation to focus on fewer accounts, which make up 80 per cent of the portfolio.

 

In our reckoning, if AMCON is able to resolve the nearly 2,000 accounts, it would have achieved over 80 per cent of its recovery mandate. In line with our sunset period, we are tinkering with the idea of increasing the threshold of the AMP scheme to N1 billion.

 

We have also classified 350 accounts with current exposure of over N3.2 trillion into a category referred to as Critical Assets. We consider the resolution of these accounts to be germane to the success of AMCON’s recovery mandate.

 

We give special attention to these accounts at top management level and develop strategies for resolving them. The largest concentration is in the energy sector, which constitutes 27 per cent. As we have always stated, one of the major challenges to AMCON’s recovery mandate is the slow pace of our judicial processes.

 

However, we have continued to engage with the judiciary and we believe that there is now greater awareness about the role of AMCON amongst the judges at the trial courts as well the justices of the appellate courts and they have been supportive.

Just as it is with the judiciary, the media have come to understand that AMCON is fighting for the good of all Nigerians because recovery of these monies and its judicious application  to the Nigeria economy will improve critical infrastructure such as roads, rail lines, security, power generation and distribution, mass housing and a whole lot of others. That is what we have been doing in a nutshell.

 

On assumption of office as MD/CEO of AMCON, what did you meet on ground in terms of structure and processes?

 

For me, no matter the process of any organisation, be it the system, technology and people, the most important for me is the human capital that we met on ground. So, I will look at this question from that perspective.

 

We met a team of workers who are dedicated, enthusiastic and ready to serve the nation by helping in restructuring of accounts and in the recovering of debts owed the country by a few individuals.

 

We saw the progress by previous management and laying of solid foundation to build on. The next critical economic growth driver where we paid so much attention is technology.

 

Again, as you know, technology accounts for much of the economic and social progress of the past few centuries. The rate of technological progress influences economic growth and so we paid serious attention to that. Looking at what happened with the dawn of the dreaded coronavirus (COVID-19),

 

I can tell you that AMCON was one of the leading government agencies that did not gasp for air when organisations had to work from home as a result of the COVID-19 shut down. It was seamless for us during the period as our staff worked from home. We had our regular meetings and carried out our operational activities as if we were operating from our offices.

 

Much later, we also changed the approach to more of enforcement from the older approach of negotiation and restructuring. We had to do that because the previous management dealt with the low-hanging fruits so to speak.

 

Most of the debts we met on ground were hard-core, which required a new approach if they are to be realised. Therefore, we had a change in strategy, given the fact that we are fast approaching our sunset period, without any luxury of time. Therefore, we met a good structure on ground, which we built on.

 

What would you say led to the second request that resulted in the amendment of the AMCON act again?

 

First, I must underscore the fact that it is not unusual to periodically review or amend the law that governs activities of any organisation. I am sure you have heard some complaints and concerns about even the Nigerian constitution and so on. No such document created by man is perfect. So, the AMCON Act in itself was also not a perfect document.

 

Those who drafted the Act knew that a time would come when there would be need for a review.

 

AMCON obligors are tricky and are constantly trying to avoid, circumvent and totally deny commitments and obligations. In the course of trying to recover, we encounter several challenges and one of the greatest challenges we have encountered overtime is through the instrumentality of the courts.

 

AMCON obligors know fully well that the Corporation has a sunset date, so they get wiser by the day; deliberately hiding under the technicalities of the law to cause orchestrated legal delays. When you find yourself in that situation, what do you do as a government?

 

Therefore, the Act was amended first in 2015 to address some of the encountered challenges, which the 2015 amendment thoroughly addressed. That done, the obligors changed to other tactics, which again necessitated another amendment in 2019.

 

What is your major concern with your recovery efforts and approaching sunset time?

The whole objective of government is to enable AMCON recover the loans bought from banks in order to settle our debt without recourse to taxpayer’s money, which is over N5 trillion as we speak.

 

This is not the sort of additional burden we should pass on to    the Federal Government now when government is overstretched with funding other critical areas of our national development.

 

We are also lucky the National Assembly, through its committees, fully understands what we do and the kind of support we require from them and they are always ready and able to provide the support.

 

We fear that if at sunset AMCON is unable to recover the huge debt, it becomes the debt of the Federal Government of Nigeria, for which taxpayers’ monies will be used to settle.

 

The implication is that the public will be made to pay for the recklessness of only a few individuals who continue to take advantage of the loopholes in our laws to escape their moral and legal obligations to repay their debts.

 

That is why our renewed strategy for recovery focuses more on enforcement. It has become clear to us that to attain the target as we approach sunset, we must redouble our efforts in the area of recovery. Interestingly, the AMCON Act anticipated a situation where we may need to enforce if negotiations fail.

 

Negotiations have failed us and that is why you see more of AMCON enforcements in the news lately. It is the only way to bring these recalcitrant obligors to the table.

 

With all the efforts that you have put in place, including naming and shaming of heavy debtors, some obligors have remained recalcitrant, what would you suggest to government going forward, especially in line with sunset?

 

We have said it several times that some of them borrowed the money from the banks with no intention to pay back, which was why we have been calling on the Federal Government to reconsider the reintroduction of the Failed Bank Act to make the operators also answerable.

 

We shall continue to operate within the law and encourage that the debt obligations of the recalcitrant debtors follow them, whether in government employment or otherwise.

 

It is not a bad thing to borrow money, but it is bad to avoid paying back. Government should not do business with those that cannot keep to commitment. The enormous challenges that you faced led to you changing your recovery strategy at some point.

 

Would you say that change in strategy has eased the challenges AMCON hitherto faced as well as improved your recovery mandate?

 

Our initial strategy was to negotiate with obligors, restructure and continue to wait on recovery. On some few cases, we even had to inject additional capital to  support some of the businesses that are strategic to the economy.

 

However, overtime, we realised that such strategy will not work, and we may be unable to recover, given our sunset date.

 

Let us not forget that some of these faulters had been with the banks for more than five to ten years before being transferred to AMCON. Meaning if you can add that to 10 years of AMCON, talking can no longer solve the problem, after many failed promises.

 

The only way forward is enforcement. Therefore, we had to change our operational strategy. This new strategy gives support to enforcement and puts AMCON in a position of strength because we do not have the luxury of time.

 

Like I said earlier, all the low hanging fruits have been dealt with before we arrived, leaving us with only the hardcore debts.

 

It will interest you to know that we have been in court with some of the obligors for nearly ten years and we cannot continue to wait on their terms – mind you, some of them do not have any intention to pay back, so you need some tinkering to force them to the table.

 

Now, with the change in strategy, a lot is happening because we have made them uncomfortable, just as we have made huge recoveries since we changed our strategy.

 

With your experience as CEO of this top agency, should Nigeria decide to toe this line in the future, what would be your advice to the Federal Government?

 

Simple! I will tell them to make the Act establishing any such AMC as strong as possible so that the obligors will not have that luxury of going to the court to tie AMC down for years hiding under some legal technicalities and loopholes.

 

I will advise that government establish a special court that would deal with cases related to AMC with dispatch. AMCON has cases that have dragged for over 15 years, which is not good for the country because of the legal battles that we have had to fight and are still fighting.

 

And the underlying collateral should be surrendered for easy disposal without going to court abinitio.

 

Is Ahmed Kuru thinking about writing his memoir sometimes soon and how do you relax when not chasing debtors?

 

No. There is nothing extraordinary about me to write about. I am just an ordinary person like most Nigerians, living an ordinary lifestyle. I like reading a lot of literature no matter the topic

. I enjoy swimming, watching movies and a fan of good football, if it involves the Super Eagles of Nigeria and Arsenal. I love Arsenal because they play amazing football and, they can disappoint you when you least expect it like some of our obligors. I love family.

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