Nigeria is facing the risk of never recovering about 5.5 trillion naira ($15 billion) of bad loans taken over during a banking crisis more than a decade ago.
That is how much the state-owned Asset Management Corp., or Amcon, still has to collect from Nigerian companies that have failed to repay the debts they once owed lenders, Chief Executive Officer Ahmed Kuru said at a conference in Lagos on Wednesday. Delays in litigation are slowing the process, while tepid economic growth is weighing on the ability of businesses to survive, he said.
Modeled on organizations including Ireland’s National Asset Management Agency Ltd. and Korea Asset Management Corp., Amcon used bonds to bail out 10 lenders and buy more than 12,000 loans from industries including aviation, gasoline marketing and manufacturing after the 2008-09 oil price crash. It’s so far recovered 1 trillion naira, Kuru said.
Bloomberg reports that Amcon needs to recover the outstanding debts to enable it to meet obligations to the Central Bank of Nigeria, which provided the cash it used to repay holders of bonds issued to acquire the loans, he said.
The CEO said that extending the operations of Amcon beyond its 2023 deadline will do more harm than good, because that could encourage bad behavior in the financial industry and among borrowers.
“The federal government should be appropriating the money yearly,’’ required to meet its obligations should the bad debts are not recovered.