By Bashir Ibrahim Hassan
Debt recovery is as daunting a task as anything. Ask anyone with banking experience he/she will tell you how staff in debt recovery departments are loathed by bank debtors. This is what we are witnessing today, the loathing of Asset Management Corporation of Nigeria (AMCON) by some recalcitrant debtors in the wake of its heightened activities in debt recovery.
It is tempting in Nigeria to side with a debtor narrating his ordeal at the hands of debt collectors because of the picture such encounter evokes in our minds due to the experience we all share of the bad reputation rent collectors acquired in our communities due to the manner they employed to recover their debt including subjective use of law enforcement agents. It is even more tempting to believe when such narratives are told in our news media with a measure of sophistry.
But reading between the lines will show a strenuous effort to stand truth on its head. But the reality is over the years, there has been developed a body of laws to ensure fair dealings in debt collection in Nigeria and globally. So, that portrayal of the debt collector as reprehensible villain out to wreck lives of a struggling debtor— either as an individual or a business concern—belongs to the past or in the warped imagination of the portrayer.
Therefore, before a statutory body in the league of AMCON, established and operating with the purview of law and under a regime committed to laid-down rules, is seen in open dispute with a debtor, all amicable options must have been exhausted. This aside, no company or individual is forced to borrow money in the first place. Ultimately, if companies owe a debt, it’s because they chose to borrow money. Their lenders made that loan, or offered the credit line, contingent upon a documented pledge to pay it back. This means creditors do have a right to their money, and a debt collector is simply trying to reclaim what is legally and ethically owed by the debtor.
I once argued that the world economy is supported by debt. This means that we are operating a debt-dependent economy. In essence, therefore, debt in itself is not always a bad thing.
The problem of debt arises when there is default. So the question is how do we avoid defaults, and if they eventually happen, how do we manage the crisis that follows? There is no one-size-fits-all answer to these questions. Every nation studies its economic peculiarities and adopts the best approach that will mitigate the potential for a catastrophe.
Nigeria has had its own fair share of the impact of the 2008 global financial meltdown on its banking sector. And we adopted some innovative measures to prevent systemic collapse of our banking system. Three prominent ones stand out – bailout, bridge banking and, perhaps the most significant, the establishment of AMCON in 2010.
AMCON was created to be a key stabilizing and re-vitalizing tool to revive the financial system. It went ahead to efficiently resolve the non-performing loans (NPL) assets of the banks in the Nigerian economy. Its objective include: assist eligible financial institutions to efficiently dispose of eligible bank assets; efficiently manage and dispose of eligible bank assets acquired by it; and obtain the best achievable financial returns on eligible bank assets or other assets acquired by it.
So far AMCON has acquired about 13,774 Non-Performing Loans (NPLs) worth N3.6 trillion from 22 commercial banks in Nigeria and provided financial accommodation of N2.2billion, a protected N4.7trillion of depositors’ funds and interbank takings as well as saved approximately 14,000 jobs. This was done in pure national interest. No one can deny the fact that, through AMCON’s intervention, the Federal Government successfully managed our debt crisis and saved our banking system from imminent systemic collapse. But this achievement will not be complete until and unless it recovers those bad debts, which it uses tax payers’ money to purchase.
To help it in this recovery task, AMCON has recently inducted successful firms that qualified as its Asset Management Partners (AMPs). The AMPs are consortiums with specialist skills required to ensure recovery and debt resolution from banking, legal, valuation and accounting backgrounds. The move is AMCON’s strategy to resolve over six thousand accounts with loan balances of N100million and below.
Indeed, debtors are in safe hands with the current Managing Director/CEO of AMCON Ahmed Lawan Kuru. His vast experience as a risk management expert is widely acknowledged.
He knows his onions well, having played at the top echelon of the defunct Bank PHB as executive director overseeing critical areas like Risk Management, Compliance, Commercial Banking, Northern Operations, Public Sector, Multilateral Agencies and the West Coast, East and Central Africa expansion programme of the bank. Before assuming his current position of MD/CEO at AMCON, Ahmed was the MD/CEO of Enterprise Bank Limited. He was also Executive Vice Chairman, Emeritus Capital Limited, a financial service firm with speciality in international business development focusing in sub-Saharan Africa.
Surely, he is the type of chief executive who knows that loans are the engine of progress of modern economy; so he will never see debtors as enemies as insinuated in some quarters. On the contrary, he is committed to supporting businesses with a view to enhancing their productivity. And, more than that, he wants tohelp them transform their NPLs to RPLs (Re-performing loans).
Doing this, Ahmed believes, will provide liquidity to the banks, which will help them meet their own obligations as well. So he knows how to balance his act between giving a breather to debtors to meet their obligations and the need for AMCON to realise its own mandate.
So what we are seeing today in heightened AMCON activities is nothing short of adoption of an aggressive recovery strategy that has led to increased repayment from hitherto recalcitrant obligors. As said earlier, AMCON is simply trying to reclaim what is legally and ethically owed by the debtor. There is no room for any sentiments here. It is business, pure and simple.
Hassan is a business and financial analyst
