Nigerian businessmen have for decades survived on bank loans. While they make huge profits from ventures and have risen to the top of the industries where they operate, they hardly pay back loans. They plunged the banking sector into crisis years ago before The Assets Management Corporation of Nigeria (AMCON) bailed out the banks, buying all bad loans, priced at nearly N2 trillion. But years after AMCON’s intervention, many of these businessmen have refused to settle their obligations with the company.
To end the ugly trend, the Central Bank of Nigeria (CBN) instructed AMCON to publish the list of 217 “chronic debtors”. The company has published a list of 100 out of a total of 12,744 obligors on its books, with debts totaling N953.43 billion ($3.4 billion). However, the list is only the first batch of many to be published.
AMCON was established by the Act of the National Assembly of Nigeria of July 2010 with an intended 10 years life Span. The body acted as the buyer of banks for the Nigerian Government by acquiring the Non-performing loans (NPLs). The original book value of the acquired NPLs was N4.02 trillion at a price of N1.76 trillion with a commensurate issue of Zero Bond for the NPL acquired.
With the debtors failing to settle their obligations, AMCON has been taking over their assets. Last week, the company took over the assets of Afrijet Airlines Ltd. owned by Chief Vitalis Ibe. According to the list published by AMCON, Afrijet owes Nigerian lenders Keystone Bank and Fin Bank (both acquired) the sum of N10.89 billion.
A company owned by a Nigerian Senator was also recently shut down by AMCON for defaulting on repayment of debts of N11 billion.
“AMCON, under the leadership of Mr Ahmed Kuru, had recently increased the tempo of its recovery and was going after some of its 400 obligors whose total debts account for more than N4.5 trillion,” a statement by the company said. It advised the debtors in the list “to engage us for resolution of their unpaid obligations”.
The amount owed by 400 obligors can cater for more than 70 percent of Nigeria’s 2016 budget.