The Managing Director/Chief Executive Officer, the Asset Management Corporation of Nigeria (AMCON), Ahmed Kuru, is a career banker with professional experience spanning nearly four decades. Before his appointment by President Muhammadu Buhari as Managing Director/CEO in August of 2015, Kuru served as the Managing Director/CEO of erstwhile Enterprise Bank Limited, which he returned to profitability within one year. In the course of his duty to recover N5 trillion debts owed Nigeria by a few individuals, Kuru introduced a far-reaching resolution strategy which increased the tempo of recoveries and tactically refocused AMCON on value enhanced exit of its portfolios. Under his leadership, AMCON was able to divest 100 per cent of its equity holding in its bridged banks and recently acquired Polaris Bank Limited (formerly Skye Bank Plc), which is now being repositioned for sale. Kuru, who was reappointed by President Muhammadu Buhari for a second and final term of five years as AMCON Managing Director/CEO, spoke with COLLINS NWEZE on his first five years as AMCON boss and the future of the corporation.
What is the economic rationale behind the enactment of the AMCON Act and the subsequent establishment of the corporation?
The rationale behind the enactment of the AMCON Act and subsequent establishment of the corporation has been justified by many stakeholders. Prior to the establishment of the corporation, the Nigerian economy was in dire straits. There were foreign portfolio withdrawals of credit lines and investment from Nigeria. The stock market also collapsed, leading to loss of about 80 per cent of its value. Banking industry crisis deepened due to poor risk management that led to increase in the non-performing loans (NPLs) of the banks as a percentage of industry loans.
At a point in 2009, NPLs as percentage of all bank loans was as high as 37.25 per cent. I salute the courage and the wisdom of the Central Bank of Nigeria (CBN) for quickly intervening by proposing to the National Assembly the need to set up an Asset Management Corporation to stabilise the economy, which was the global trend at that time.
How has AMCON performed since inception till date in line with its constitutional mandate as specified in the Act establishing the corporation?
Setting up AMCON is a blessing to Nigeria’s economy. Despite the lingering economic challenges and deliberate tactics of some recalcitrant obligors, the corporation has recorded a lot of successes. In the first place, we supported so many businesses immediately after the global economic crisis. Some of them are doing well now. The financial institutions were equally supported to avoid a systemic collapse. Some banks are operating today due to AMCON’s intervention in the industry. In terms of recoveries, so far, we have made a total recovery of above N1.2 trillion. We have sold assets worth about N500 billion and have resolved close to 5000 eligible bank assets (EBSs). The corporation has paid over N2 trillion to the CBN.
The fundamental objectives for the establishment of AMCON was to rescue commercial banks and some underlying strategic businesses in Nigeria from the brink of collapse in the aftermath of the global financial crises of 2008 through acquisition of non-performing loans and to dispose of the underlying assets in the most profitable manner. AMCON also had the mandate to recapitalise the banks and to recover the debts using the various resolutions mechanisms created under the Act, which I can tell you have been executed effectively.
As at today, AMCON has achieved the first mandate of purchasing the Non-performing Loans (NPLs) and providing liquidity to the commercial banks. We are currently focused on the second and most difficult phase of recovery and restructuring of the bad loans. Recall that AMCON acquired over 12,000 NPLs worth N3.7 trillion from 22 banks and injected N2.2 trillion as financial accommodation to 10 banks in order to prevent systemic failure. As a result of this intervention, our current liability with CBN is around N4.7 trillion while the sum of N2 trillion has been repaid so far.
In the area of supporting businesses, AMCON has also done very well, especially in the aviation and manufacturing sectors. Our intervention efforts in Arik Air with the support and collaboration of the Federal Government did a great service to the growth of the sector. A similar intervention in Aero Contractors also saved the airline from collapse. As a matter of fact, the Nigerian Civil Aviation Authority (NCAA) certified Aero, which is under AMCON receivership, to commence C-check maintenance services on Boeing series in Nigeria. This is a commendable feat in Nigeria’s aviation industry. And there are several other companies that we have saved.
How would you assess the Asset Management Partners (AMP) who are debt recovery agents engaged by the corporation?
Again, in an attempt to focus our resources on the recovery mandate, we have identified about 6,000 loans with outstanding balances below N100 million, which constitute only 20 per cent of our current portfolio. This portfolio has been outsourced to debt recovery agents under the Asset Management Partners (AMP) scheme, which has created huge employment opportunity for others. This has enabled the corporation to focus on fewer accounts, which make up 80 per cent of the portfolio. In our reckoning, if AMCON is able to resolve the nearly 2000 accounts, it would have achieved more than 80 per cent of its recovery mandate. In line with our sunset period, we are tinkering with the idea of increasing the threshold of the AMP scheme to N1 billion. We have also classified 350 accounts with current exposure of over N3.2 trillion into a category referred to as criticised assets.
We consider the resolution of these accounts to be germane to the success of AMCON’s recovery mandate. We give special attention to these accounts at top management level and develop strategies for resolving them. The largest concentration is in the energy sector, which constitutes 27 per cent. As we have always stated, one of the major challenges to AMCON’s recovery mandate is the slow pace of our judicial processes. However, we have continued to engage with the judiciary, and we believe that there is now greater awareness about the role of AMCON amongst the judges at the trial courts as well the Justices of the appellate courts, and they have been supportive.
What did you meet on ground in terms of structure and processes when you assumed office?
For me, no matter the process of any organisation, be it the systems, technology or people, the most important for me is the human capital that we met on ground. So, I will look at this question from that perspective. We met a team of workers who are dedicated, enthusiastic and ready to serve the nation by helping in restructuring of accounts and in the recovering of debts owed the country by a few individuals. We saw the progress made by the previous management and by laying solid foundation to build on.
You led the 2019 AMCON Amendment Act. What would you say led to this review of the corporation’s law?
The AMCON Act in itself was also not a perfect document. Those who drafted the Act knew that a time would come when there would be need for a review. AMCON obligors are tricky and are constantly trying to avoid, circumvent or totally deny commitments and obligations. In the course of trying to recover debts, we encounter several challenges, and one of the greatest challenges we have encountered over time is through the instrumentality of the courts. AMCON obligors know full well that the corporation has a sunset date, so they get wiser by the day, deliberately hiding under the technicalities of the law to cause orchestrated legal delays. When you find yourself in that situation, what do you do as a government? Therefore, the Act was amended first in 2015 to address some of the encountered challenges, which the 2015 amendment thoroughly addressed. That done, the obligors changed to other tactics, necessitating another amendment in 2019. We are therefore grateful to President Muhammadu Buhari for signing it into law as soon as it was presented to him by the National Assembly.
What is your major concern with your recovery efforts and approaching sunset time?
The whole objective of the government is to enable AMCON recover the loans bought from banks in order to settle our debt without recourse to taxpayer’s money, which is over N5 trillion as we speak. This is not the sort of additional burden we should pass on to the federal government now that the government is overstretched with funding other critical areas of our national development. We are also lucky the National Assembly, through its committees, fully understand what we do and the kind of support we require from them, and they are always ready and able to provide the support.
We fear that if at sunset AMCON is unable to recover the huge debt, it becomes the debt of the federal government of Nigeria which taxpayers’ monies will be used to settle. The implication is that the public will be made to pay for the recklessness of only a few individuals who continue to take advantage of the loopholes in our laws to escape their moral and legal obligations to repay their debts. That is why our renewed strategy for recovery focuses more on enforcement. It has become clear to us that to attain the target as we approach sunset, we must redouble our efforts in the area of recovery. Interestingly, the AMCON Act anticipated a situation where we may need to enforce if negotiations fail. Negotiations have failed us and that is why you see more of AMCON enforcements in the news lately. It is the only way to bring these recalcitrant obligors to the table.
What steps would you suggest to the government concerning recalcitrant debtors given that AMCON has sunset time?
We have said it several times that some of them borrowed the money from the banks with no intention to pay back, which was why we have been calling on the federal government to reconsider the reintroduction of the Failed Bank Act to make the operators also answerable. We shall continue to operate within the law and encourage that the debt obligations of the recalcitrant debtors follow them, whether in government employment or otherwise. It is not a bad thing to borrow money, but it is bad to avoid paying back. Government should not do business with those that cannot keep to commitment. We know things are hard, but commitment is commitment. At least, let us be talking and performing. We shall continue to pursue them through the instrumentality of the courts by being law abiding, although some of them want to avoid the law.
The enormous challenges that you faced led to you changing your recovery strategy at some point. Would you say that change in strategy has eased the challenges AMCON hitherto faced as well as improved your recovery mandate?
Our initial strategy was to negotiate with obligors, restructure and continue to wait on recovery. On some few cases, we even had to inject additional capital to support some of the businesses that are strategic to the economy. However, over time, we realised that such strategy will not work, and we may be unable to recover, given our sunset date. Let us not forget that some of these defaulters had been with the banks for more than five to 10 years before they are transferred to AMCON, meaning if you can add that to 10 years of AMCON, talking can no longer solve the problem after many failed promises. The only way forward is enforcement. Therefore, we had to change our operational strategy. This new strategy gives support to enforcement and puts the AMCON on a position of strength because we do not have the luxury of time.
Like I said earlier, all the low hanging fruits had been dealt with before we arrived, leaving us with only the hardcore debts. It will interest you to know that we have been in court with some of the obligors for nearly 10 years, and we cannot continue to wait on their terms. Mind you, some of them do not have any intention to pay back, so you need some tinkering to force them to the table. Now, with the change in strategy, a lot is happening because we have made them uncomfortable just as we have made huge recoveries since we changed our strategy.
What would you say are the high points of your stewardship as Managing Director/CEO in the last five years?
Like I mentioned earlier, there is no amount of investment in human capital development that is too much. Within the period of our assignment here, we have groomed a good number of competent and capable work force that can compete with their peers anywhere in the world as far as asset resolution management is concerned, which is very good for the economy of our great country. We cannot over emphasise that fact. Our highpoint is our ability to strengthen our human capital assets, resulting in putting in place a good and transparent structure that matches global standards and have tried to instill a culture of commitment to service to fatherland, particularly in our team of young and upcoming staff.
We have strengthened our human capital assets, which has resulted in putting in place a straight process on ground to ensure transparent means of dealing with our activities. This has resulted in higher recoveries and resolutions. On the business side, we have intervened in quite a lot of businesses, witnessing return and sustaining job security and enhancing economic activity.
The Presidency set up what it called the Inter-agency Committee on AMCON to complement the efforts of your Corporation. Can you bring us up to speed with that committee and what it has done since it was set up?
On September 16, 2019 if I remember correctly, the Presidency graciously consti tuted a committee, which it christened ‘Inter-Agency Committee for the Recovery of AMCON Debts.’ The committee is comprised of eight key government agencies – Independent Corrupt Practices Commission (ICPC); Nigerian Financial Intelligence Unit (NFIU); AMCON; Nigeria Deposit Insurance Corporation (NDIC); Federal Ministry of Justice (FMoJ); Economics and Financial Crimes Commission (EFCC); the Central Bank of Nigeria (CBN) and the Department of State Services (DSS). The essence of the committee is basically to assist the corporation in its recovery efforts and pursue criminal lines where one exists. The chairman of the committee is the chairman of the ICPC. The committee is working seriously on identifying cases. A few strategic accounts are being reviewed by the sub-committee using an unconventional approach towards the recovery of the debts by preferring criminal charges against the obligors where criminal infractions have been identified.
What has been your experience trying to recover bad debts from debtors who are not ready to pay back their debts?
I can tell you the assignment is not easy at all. As a recovery agency, our main objective is recovery from both distressed and also affluent members of the public. In both cases, it is a serious matter, particularly where enforcement is involved. But to the glory God Almighty, we have continued to remain sane and humble. My personal approach to life is simple: I always say we are not only accountable to Mr. President, Muhammadu Buhari, who found us worthy to serve in this capacity as members of a team and even reappointed us for a second term, we are also accountable to Nigerians and the Almighty. But like you rightly said, I do not envy the job myself, because as humane as we have been and as compassionate as we have tried to be in handling some obligors, they have continued to spew and sponsor all manners of campaigns of calumny against the management team under my leadership. But we are not deterred. My consolation is that we are not doing anything that is outside our scope. Some of our obligors, unfortunately, instead of focusing on settling their obligations have taken the matters personal, very personal. But we put our trust in God.
AMCON was designed to last for a period of 10 years except if the National Assembly thinks otherwise. But if AMCON sunset comes and the Corporation is not able to resolve all the debts, what will be the next step forward?
AMCON is not designed to last 10 years, but the funding model was projected to last 10 years depending on the situation of the economy. However, this is a situation we do not want. Unfortunately for us, we have reached a stage in the operations of AMCON that our future successes and achievements most certainly depend on the strategy of the law and law enforcement and its application. Unfortunately for us, besides the effort of our staff, progress is dependent on third parties like the judiciary substantially and other agencies of government. It is on that basis we sought for the amendment of the AMCON Act hoping that the amendments will curtail frivolous tactics employed by recalcitrant obligors under our judicial system and improve our debt recovery efforts. If AMCON fails to recover the outstanding debt, the whole thing will be a burden to all of us. The National Assembly is there to support all the way to the end. They are conscious of the issues at stake and are supportive.
Is Ahmed Kuru thinking about writing his memoir anytime soon?
No. There is nothing extraordinary about me to write about. I am just an ordinary person like most Nigerians, living an ordinary lifestyle.
Most CEO’s play gulf, some play football, others enjoy boat ride or polo as leisure. How do you relax when you are not chasing debtors?
I like reading a lot of literature no matter the topic. I enjoy swimming, watching movies and a fan of good football if it involves the Super Eagles of Nigeria and Arsenal. I love Arsenal because they play amazing football, and they can disappoint you when you least expect like some of our obligors. I love family.
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