The Chief Executive Officer of Asset Management Corporation of Nigeria, Ahmed Kuru, has called on agencies that are saddled with the responsibility of regulating the aviation industry and other critical sectors of the economy to adopt the same template, which the Central Bank of Nigeria used in streamlining banking operations in the country.
Kuru stated this as the guest speaker at the 6th Nigeria Transport Awards and Lecture in Lagos, where he presented a paper entitled: ‘AMCON’s intervention in transport and allied sector; achievements, challenges and prospects’.
Kuru, who was represented at the event by the Senior Vice President, AMCON, Mr. Kamilu Omokide, argued that the huge debt owed the corporation would have been avoided if the debtor companies had proper corporate governance structures that took better business decisions.
With many failed entities as a result of poor decisions that led to huge non-performing loans, he said the government had no choice then but to create AMCON to mop up the bad loans, thereby stabilising and revitalising the Nigerian economy.
To do that effectively, AMCON, he noted, purchased non-performing loans worth about N181bn from various banks, but 90 per cent of the loans purchased was in the aviation sector.
He said despite plans to aid the resuscitation of the airlines with additional investment of N40bn on very good terms, there were still no light at the end of the tunnel, which compelled AMCON to appoint receiver managers for a lot of the companies, including Arik and Aero.
Kuru stated, “AMCON was created to be a stabilising and revitalising tool in the Nigerian economy. Towards achieving our mandate, we purchased non-performing loans of about N181bn from various banks. Over 90 per cent of this was in the aviation sector.
“To place the companies in a position to recover and generate adequate cash flow, we gave additional on-lending facilities (in collaboration with Central Bank of Nigeria and Bank of Industry) of almost N40bn on very good terms.
“Unfortunately, notwithstanding this support, the companies could neither pay the old nor new loans. We have, therefore, been compelled to appoint receiver managers over a lot of the companies, the biggest being Arik and Aero.”
Kuru noted that AMCON’s intervention in the aviation industry had not come without its challenges, which stemmed from shareholders’ actions, lack of support by some trade creditors and some foreign lenders, and increased union demands, but added that these were not unexpected and had been professionally and transparently handled over the period.
He stated, “The new management in Arik had to take bold decisions to downsize its operations, especially cutting down all the long haul flights due to the losses being sustained on those operations and the lack of equity capital to absorb the losses.”