February 21, 2016 - 6:19 PM EST
Print Email Article Font Down Font Up
Ahmed Lawan Kuru - the Change Agent At Amcon

On February 18, 2016, Ahmed Lawan Kuru clocked six months in the saddle as the second Managing Director/Chief Executive Officer of the Asset Management Corporation of Nigeria (AMCON). AMCON is, of course, the popular acronym for

Nigeria's
"bad bank", which was set up in 2010 in response to the 2008/2009 financial crisis with the mandate to absorb toxic bank debts which shook the country's financial system to its foundations.

Although six months is not enough time for a rounded assessment of Mr. Kuru's leadership of the corporation, one can tell from his initial actions that he has taken off on a good note and is determined to lead the institution in the right direction. This is clear from his calm yet strategic manner. Without much color and drama, he has communicated a resolute focus on re-positioning AMCON as a serious and professional institution, one that is driven not only by a zest to protect public interest but also to implementing policies that will enhance economic growth, keep critical businesses alive, save jobs and reduce unemployment.

The initial purchase of the toxic debts of distressed banks by the previous Chike-Obi management soon after the establishment of AMCON in 2010 pretty much helped to stabilize the banking system. Significant work was also done to recover a substantial part of the debt, and in turn-around and sale of some of the acquired assets. These include the sale of Enterprise Bank to Heritage bank and Skye Bank at a combined price of N181.1billion.

However, a lot of work was also left undone and questions were asked about some decisions taken on key issues. The previous leadership was seen in some quarters as being too lenient with some of the highly influential, politically connected major debtors who were tagged the 'big guys'. AMCON was also seen in many quarters as some kind of slush fund for the settlement of political associates.

When Kuru assumed duty in August 2015, he resisted the temptation of "coming out smoking" and making sweeping populist statements to pander to the public. Rather he focused on mastering his new mandate and updating himself on the facts of AMCON's track record and current status. He maintained a low profile with focus on holding meetings and engaging the debtors to re-negotiate new realistic re-payment plans in view of the current economic realities.

He explored this strategy for the first few months. Some of the debtors responded. But the majority, most of whom are the heavy debtors whose debts are in the N10 billion and above category, did not turn up for the meetings.

Having tried diplomacy and recorded minimal success, Mr. Kuru has upped the ante with a series of bold public actions and statements which demonstrate that he is intent on exploring all legitimate means necessary to compel the recalcitrant debtors to pay up their debts in the shortest possible time or have their assets forfeited. The message to the recalcitrant obligors was clear: "you can do this the nice way or the hard way. It's your choice. But you must do it."

One of these actions was the publication of the AMCON debtor list in national newspapers early this month. This 'name and shame' strategy exposed the names of about 220 firms and their directors, whose total outstanding debts to AMCON are put at a whopping N1.146 trillion.

Top on the list of debtor firms was Seawolf Nigeria Limited and Capital Oil & Gas Industries Limited with a staggering debt profile of N160.09 billion and N104.8 billion respectively.

Other firms on the debtor list include Tanzila Petroluem Limited - N49.2 billion; Home Trust Savings - N25.749 billion; Suru Worldwide Ventures - N24.41 billion and Roygate Properties - N23.261 billion amongst others.

His strong public statements against the arrogant and uncooperative attitude of these high profile debtors has drawn attention to the shamefully luxurious lifestyles of some bank debtors. Speaking recently at a meeting with the Senate Committee on Banking, Insurance and other Financial Institutions, Mr. Kuru decried the nonchalant attitude of those high profile debtors and wondered why they would choose to maintain expensive habits while refusing to pay back their debts:

As he put it: "We have seen that most of those indebted to AMCON are rich men who fly in private jets, live in big mansions and have taken money and they are not paying back."

According to Kuru, these 'big men', who are just 300 in number, account for more than 80 percent of the outstanding N5.6 trillion debt being managed by AMCON. The new AMCON CEO's strategy, in line with the tough anti-corruption stance of President Muhammadu Buhari, is to ensure that all debts are recovered and bonds redeemed.

But the Kuru strategy is much bigger than debt recovery. He has also put together an elaborate three year Business plan which amongst other initiatives, aims to engage private sector management expertise in turning around some of the troubled assets into profitable concerns for eventual sale at a premium. This is in line with the core mandate of AMCON, which is to intervene, stop companies from failing, inject funding and expertise so as to turn them around and put them in a shape that makes them attractive to investors.

Turning around companies is an area that Kuru has had direct experience, and successfully too. Under the previous Management of AMCON, Mr. Kuru was appointed as Managing Director of Enterprise Bank, one of the failed banks whose toxic assets were absorbed by AMCON. Under his leadership, Enterprise Bank moved from a position of loss to profit within a three-year period. Some of his key achievements as CEO Enterprise Bank include growing the bank's balance sheet by about 36 per cent and increasing deposits by over 30 per cent at a time the Central Bank had introduced the 75 per cent Credit Reserve Ratio policy for public funds. He is also credited with improving the asset quality of the bank which led to a significant reduction of Non-Performing Loans (NPLs) and executing a rebranding campaign that gave the bank a new corporate look and feel.

Now as the head at AMCON, Mr. Kuru is now driving this turnaround strategy at a higher level. Only recently, AMCON dissolved the board and assumed the full ownership of Aero Contractors, one of the leading but debt burdened airlines in

Nigeria
. Aero Contractors is one of the airlines whose toxic assets were absorbed by AMCON when it was headed down due to bloated debts to the defunct Oceanic Bank.

AMCON has since 2010 invested about N20 billion of public funds into the airline. Unfortunately, there has not been any reasonable sign of improvement in the operations of the airline. The plan now is to get a good and strong management team of professionals for the airline to go in and fix the company. Speaking on the rationale for the intervention, the AMCON boss Kuru said that: "beyond funding they had a problem with corporate governance. Aero is a strong brand that needs to be supported. We don't want it to lose its prime position in the industry. An industry based management team will be put in place to provide the highest level of professional competence which would ensure a quick repositioning of the company." Furthermore, AMCON has appointed one of the "big four" multi-national professional services firms, Ernst & Young to audit the firm. The auditors are to find out reasons why the airline is still struggling despite AMCON's repeated financial interventions to keep it running.

As Mr. Kuru works assiduously to deliver on the mandate given to him by the President Muhammadu Buhari, other challenges loom. One of these challenges is the drastic fall in oil prices.

Low oil prices have impacted negatively on national revenues and in the process affected the ability of even the government to also honor its financial obligations to some of the debtors that owe AMCON. The assets whose value have been most directly affected by the oil price crash are the oil and gas related assets like tank farms which constitutes over 30 percent of total AMCON debts. For instance, the value of a tank farm which was acquired by AMCON at N10 billion years back, now cost far less as a result of the fall in oil prices.

Also related is the decline in

Nigeria's
property market which is a direct result of shifting global property trends is weighing negatively on the value of property assets that AMCON acquired from its debtors as collaterals. Overall, this general economic slowdown poses a grave threat to AMCON's ability to sell off its assets at fairly decent prices and meet in order to redeem the N5.6 trillion bonds it had floated to purchase them.

Mr. Ahmed Lawan Kuru has so far left a positive impression that he is capable and set to deliver on the mandate of the President though he was handed the leadership of the 'bad' debt bank at a time of great economic challenges. So far, he has shown boldness, creativity, courage and communicated through his public utterances that he is a man who is tough when he needs to be but also willing to listen and engage with cooperative debtors on genuine challenges facing them. For those who think they can continue with the old ways of doing things by using political influence to escape responsibility for their debts, the message is clear: pay up or face the consequences. But this savvy, highly experienced professional is also determined to build strong structures to support debtors to become stronger, pay their debts, leave the specialized intensive care unit that AMCON was created to be and, become once again, robust businesses contributing to the economy through their products and services as well as job creation. Kuru's vision is good for AMCON, great for

Nigeria
.

Abutu is a policy analyst based in

Lagos

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Source: Equities.com News (February 21, 2016 - 6:19 PM EST)

News by QuoteMedia
www.quotemedia.com

Legal Notice