By G9ija

When the Asset Management Corporation of Nigeria (AMCON) was set up in 2010 by the Federal Government through the Central Bank of Nigeria (CBN) to take over the Non-Performing Loans (NPLs) in the banking sector, hopes were high that, finally, respite had come the way of the financial system, and indeed, the economy, over the threats of the huge bad debt (Non Performing Loans) to the economy.
Though the formation was received with mixed feelings among different stakeholders, its mandate of stabilising the banking sector was immediately felt with the take-over of more than N5 trillion loans and injection of fresh funds into the sector.
However, nearly 10 years after the establishment of the bad bank, the excitement that followed its establishment seems to have evaporated due to the inability to successfully put the debt recovery issue to rest.
Having bought those delinquent loans from affected banks at discount, AMCON was supposed to recover those loans within the stipulated time frame and return the same to the government coffers to support the economy.
Concerns are now mounting, and understandably so, as to the justification for establishing AMCON considering the ‘toxic’ impact of the continued delay in recovering those loans to the economy, especially now that the government is faced with dwindling revenue and challenges in executing critical capital projects.
Instead of achieving a reduction in the level of debts, the debts seem to be mounting and have reached N16 trillion.
This is because AMCON has continued to purchase new non-performing loans from banks outside its original mandate.
This excess debt accumulation by the corporation has become a source of concern with the National Assembly (NASS) looking for fresh ways out of the debt mess.
The National Assembly members and other concerned stakeholders are miffed over the fact that the debts are owed by few individuals who exploit the loopholes in the current AMCON Act to evade payment to the detriment of the economy.
Their anger also stemmed from the 0.5 percent annual contribution by banks to AMCON, which many analysts and shareholders believe has continued to create a hole in the banks’ pockets.