Despite widespread worries about interest rates, the Asset Management Corporation of Nigeria reported that it had successfully recovered more than 70% of the N4 trillion in bad loans from debtors.
The Times reported that this was revealed by the MD/CEO of AMCON, Ahmed Kuru, to reporters in Lagos on Monday.
“We have recovered so far more than N3.9 trillion from sinking money, which is a contribution from the banks, and for the recovery we have made approximately N1.4 trillion and the recovery rate is more than 70%.
Due to the fact that the loans were acquired through bonds, there are regrettably still interest payments due, with an average of about 11%.
The loans purchased at N1.8 trillion had an interest rate of around 11%.
He also pointed out that the initial funding schedule for AMCON was for ten years, with the expectation that the banking sector would expand at a 20% annual rate.
However, he emphasized that for the previous seven to eight years, the banking sector’s growth has been below 5%.
Although it is widely believed that AMCON is ruining businesses, he asserted that this is untrue. We invested money in certain firms that we thought would succeed, but some of them didn’t.
“We focused on 350 accounts out of about 12,000 accounts, which represents 84% of all the cases we have, and out of this, 264 cases represent N3.64 trillion what is owed, so we focused on the 350 because over 12,000 accounts represents less than 20%,” he continued.
As the Air Operating Certificate expiration date approaches, AMCON has revealed that it has given an investor responsibility for renewing the AOC process.
In an effort to pay off the N300 billion debt that Arik Air accrued when Joseph Arumemi-Ikhide served as its founder, AMCON chose to establish NG Eagle as a stand-alone airline and reallocated the assets under this new business.
Despite having secured the AOC, their efforts were hampered by claims that the airline was meant to act as a national carrier, which led to delays in the company’s inception.
“We gave three airplanes that had been idle for two years brand names. The national carrier had no dealings with AMCON. We received no motivation. So we managed to convince someone who would keep flying the AOC to buy the process of renewing it. If they do not meet the process of the AOC renewal, then it’s up to them,” he added.
Kuru did, however, imply that AMCON is prepared to discuss ownership with the leadership of Arik.
He stated: “What is crucial is that, if the owner of Arik is willing, we sit down with him and figure out a solution that makes sense to both of us before sharing it with the Central Bank and the Ministry of Finance.
“The two parties must agree that they want to reach a resolution, but sometimes we give in because we want the business to continue operating in cases where there are more than 1,000 employees.”
When you consider if the firm can survive, you may occasionally feel compelled to make more concessions. However, the opposing party must arrive with the attitude that they are prepared for a resolution.
He added that when AMCON took over Arik Air, they found seven planes on the ground, indicating that these aircraft were out of commission as a result of either cannibalization or vandalism.