Why AMCON Must Tread Softly While Recovering Loans

The Asset Management Corporation of Nigeria has been blowing hot in the past few weeks in Nigeria, shutting down organisations who are owing debts. The Asset Management Corporation of Nigeria (AMCON) was established pursuant to the Asset Management Corporation of Nigeria Act no. 4, 2010, for the purpose of efficiently resolving the non-performing loans assets of banks in Nigeria.

The body is doing its job, agreed. But Nigeria Government must learn from the Treasury Single Account, TSA’s blunder, a policy adopted by the Federal Government of Nigeria to pull all government funds in a single account, managed by the Central Bank of Nigeria. It was a good programme, with good intention, but sudden implementation of the policy is what made it bad.

 Today, Nigerian banks are cash strapped because all Government money have been moved out suddenly, whereas Government’s has the largest funds in the banks. Thousands of people have lost their jobs in the Banking sector and more people are still being sacked, despite the threat by the Government to shut down the banks if they don’t halt the incessant sacking, although the threat have been described as laughable by professional and the general populace.

If the TSA had been implemented in phases, the situation won’t be this bad as banks would have been well prepared to withstand the shocks that arose from the TSA policy.

The private sector is the highest employer of labour in Nigeria, if  AMCON continues with its ‘zombie’ way of recovering loan, I see the economy being totally  grounded, not because i am a prophet of doom, it is a reality. The hunger in the land will be further complicated as millions of people will lost their jobs, not only direct employers but indirect employers in form of vendors and other businesses that are dependent of such organisations. AMCON can re-negotiate the loans and ensure strict phased implementation and payments. For example, AMCON can arrange auto deductions from the companies’ accounts with banks. As they say, necessity is the mother of invention. Note, I am not saying that it is right to take loan and default in payments, but AMCON must look at the larger implications of their actions on the larger society and families.

Nigeria Universities and other higher Institutions are churning out graduates daily without hope of being employed, many people have lost their jobs already and the cycle goes on and on.

AMCON must stop splashing the faces of debtors all over the media and should only do that as the last option if the debtor refuses to adhere to a new arrangement. They must learn from the TSA effect and the corruption fight which in a way has grounded the economy.

Government must do what is right and in doing so, cost and effect must be their watchword because when a good policy is badly implemented, it ends in disaster. After all, government is supposed to be for the good of the people.