AMCON, name and shame wilful loan defaulters

THE Asset Management Corporation of Nigeria, which was established a decade ago to recover bad loans in the banking sector, recently painted a grim prospect: Nigerians could end up bearing the burden of a whopping debt of N5 trillion. Of this, only 20 wilful defaulters owe over 50 per cent of the total debt. Those who gobbled up the loans must be made to face the consequences of their actions.

Generally, the two major assets in which banks invest depositors’ funds are securities and loans. Credit losses on securities are minimal because the bulk of these holdings are government securities with little or no default risk. But loans are a different story. Reserve for loan loss account is established and maintained by periodic charges against earnings. The trouble begins when the banks and regulators compromise their responsibilities.

Last year, the Federal Government set up an inter-agency committee, including the Economic and Financial Crimes Commission, the Nigerian Financial Intelligence Unit and the Independent Corrupt Practices and Other Related Offences Commission, to expedite the recovery of the outstanding debts owed to AMCON. The Senate Committee on Banking, Insurance and Other Financial Institutions said in November that it had resolved to join hands with AMCON to push for the recovery of the N5 trillion debt.

The AMCON experience is a clear indication that the debt repayment culture in the country leaves much to be desired. Dodgy Nigerians are adept in manipulating the weak and compromised institutions to their selfish advantage. This must stop. The bad debts in Nigerian banks are a concern because if they become toxic, this will have ripple effects on many Nigerians. Although banks’ non-performing loans ratio decreased to 6.58 per cent at end-April 2020 compared with 10.

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