Uche Usim, Abuja
The Asset Management Corporation of Nigeria (AMCON) at the weekend raised the alarm over the frightening rise in cases of non-performing loans in the banking sector, especially among the deposit money banks.
The Managing Director of AMCON, Mr Ahmed Kuru, expressed the worry in Abuja at the investiture of governing council/induction of members of the Chartered Institute of Loans and Risk Management of Nigeria.
According to him, the total debt owed the Corporation stands at about N4.5 trillion, even as he said concerted efforts were on to recover the debt.
Describing the debt as staggering, Kuru maintained that there was no way of way it would write off N4.5 trillion debt as it would economically injurious to do so.
He added that the debt represents about half of Nigeria’s annual budget, pointing out that the figure was higher than the annual budget of countries like Rwanda and Kenya.
Speaking on the impact of the intervention of AMCON, Kuru said that when the corporation took over the toxic assets of the banking sector, the NPLs in banks was very high.
He said through aggressive recovery of the debt from chronic debtors, the NPLs came down to less than five per cent.
However, he lamented that while the corporation was busy recovering bad loans, banks were busy granting out loans without putting in place proper risk assessment criteria.
This, according to him, had shot up the banking sector’s NPLs to about 15 per cent.
He said, “The institute is doing a good job. We commend the leadership for the dynamism you have brought into this.
“A lot of professionalism and integrity is needed from you. The Asset Management Corporation is taking over bad debts because of risk management failure in loan management.
“AMCON was created because of crisis in the financial sector. We still have about N4.5tn debt uncollected and this is because some of our loans and risk management crisis were compromised.
“N4.5 trillion is higher than the budget of Rwanda, it is higher than the budget of Kenya. This induction of risk managers is a call to duty.
“Building up toxic assets is a combination of events. Let’s be above board and stand on professionalism and integrity.”
The President of the Governing Council of the institute, Dr Harriet Harriet Akubuiro, said that time had come for the country to take the issue of risk management very seriously.
She said the institute would continue to bring the importance of sound risk management practice to the front burner until it gets the needed attention.
She said, “Risk management concept is a new development in Nigeria and we need to know how to manage risks.
“The globally competitive environment has made it imperative for special focus to be placed on loan and risk management.
“The world is evolving and changes are happening every day. There is no business without risk and the one of the objectives of the institute is to perform our role on advocacy on financial matters as regards risk management in the economy.”
She commended the Central Bank of Nigeria, the Nigeria Deposit Insurance Corporation, the National Insurance Commission among others for giving recognition to the certificate of the institute.
She noted that such moves will improve the economy of the nation.