(L-R): Kola Oyekunle, Director of Corporate Governance, Nigerdock; Adewale Dosunmu, Head of Legal Affairs, Nigerdock; Rita Aniche, Head of Northern Zone, Nigerdock; Gen. I.B.M Haruna (Rtd.), Director, Nigerdock; Alex A. Okoh, Director General, Bureau of Public Enterprises (BPE); Yusuf Abdullahi, Chairman of Nigerdock Free Zone and Baba Mohammed, Head of Capital Markets, BPE, at the presentation of  the BPE/Nigerdock Joint Committee Report on the Resolution of Outstanding Issues in Nigerdock Nigeria Plc in Abuja.

Director-General of the Bureau of Public Enterprises (BPE), Mr. Alex A. Okoh has assured the Board and management of the Nigerdock Nigeria Plc that the Bureau is committed to the full realisation of the potentials of the integrated engineering and Fabrication Company.

Receiving a report of the BPE/Nigerdock Joint Committee on the resolution of outstanding issues in the company in Abuja, the Director General said that the present comatose state of the company was worrisome to the Bureau hence the decision to set up the joint committee to look into the issues militating against its operations.

He regretted that the company which was capable of employing about 6,000 Nigerians off the labour market and boosting the Nigerian local content policy, had only about 500 employees thus; negating the core essence of privatization.

Okoh said that the necessary frame work would be put in place to ensure that the company is patronized locally since it has the capability to deliver on its mandate.

“We shall look closely at all the issues militating against the smooth operation of Nigerdock. Patronage should not be denied the company because it has the capability to deliver. We should do everything possible to ensure that the company assumes its pride of place”, he stressed.

The Director-General stated that the report would be carefully studied and its recommendations escalated to the appropriate authorities for action.

Earlier, a director of the company, General IBM Haruna (rtd) had pledged the commitment of the Board to collaborate with the Bureau to ensure that the company survives and realises its potential.

He said the company apart from its core functions, was capable of conducting research for the Navy and Army if fully supported by the government. The director expressed the hope that with the synergy with the BPE, that was achievable and called for openness, integrity and transparency.

Presenting the report, the General Counsel of Nigerdock, Mr. Adewale Dosunmu said it was in two parts. He said it proffered short-term and long term solutions to move the company forward.

The equities market opened the week positive, extending gains from the previous week into the third consecutive trading session as the All Share Index rose 2.4% to settle at 38,849.65 points while YTD return expanded to 4.2%. Consequently, market capitalization rose by N329.7bn to settle at N14.2tn. Today’s performance was buoyed by price appreciation in DANGCEM (+5.0%), GUARANTY (+2.3%) and ZENITH (+2.5%). However, activity level was mixed as volume traded declined 19.7% to 604.5m units while value traded inched 46.7% higher to N16.1bn.

Industrial Goods lead Positive Sector Performance
Sector performance was largely positive as all indices closed in the green. The Industrial Goods index led the gainers chart, up 2.3% primarily due to price appreciation in DANGCEM (+5.0%).

The Banking index trailed, rising 2.0% on the back of gains in GUARANTY (+2.3%) and ZENITH (+2.5%) while uptick in MOBIL (+5.0%) and CONOIL (+10.2%) pushed the Oil & Gas index 1.7% higher.

Also, the Consumer Goods and Insurance indices rose 1.1% apiece consequent on investors taking position in NIGERIAN BREWERIES (+1.4%), GUINNESS (+4.6%) and MANSARD (+4.4%).

Investor Sentiment Weakens
Investor sentiment – measured by market breadth (advance/ decline ratio) – weakened to 4.1x from 4.4x recorded the previous Friday as 37 stocks advanced against 9 decliners.

Today’s best performers were CONOIL (+10.2%), UNITY (+9.7%) and CADBURY (+8.6%) while the worst performing stocks were VITAFOAM (-4.9%), CILEASING (-4.9%) and MEYER (-4.3%). In line with expectation, market performance was positive today as investor sentiment remained strong.

Hence, we expect the trend to be sustained in subsequent trading sessions against the backdrop of a broad based rally across sectors.

Market Statistics: Monday, 8th January 2018

The Asset Management Corporation of Nigeria (AMCON) has so far acquired over 12,000 Non-Performing Loans (NPLs) worth about N3.7 trillion from 22 banks in the country while it has injected N2.2 trillion as financial accommodation to 10 commercial banks in order to prevent systemic failure in the banking sector. This has contributed in stabilising the financial system in Nigeria.

Records from AMCON also indicate that about N3.66 trillion of depositors’ funds were protected since the creation of the Corporation during the 2008/2009 financial crisis while approximately 14,000 jobs were saved as a result of AMCON’s intervention in the banking sector.

The idea is to recover the debts either through structured repayment or dispose of transferred assets towards settlement of the Bonds.

Meanwhile, leading legal luminaries including the former Chief Judge of the Federal High Court, Hon. Justice I. N. Auta and the President of Court of Appeal, Hon. Justice Zainab Adamu Bulkachuwa have joined the campaign by the management of AMCON) in calling for a paradigm shift in debt recovery processes in Nigeria.

Such shift according to them would act as act as panacea, if indeed the Corporation were to meet its mandate of resolving its huge outstanding obligation.

Current AMCON management under the leadership of its Managing Director/Chief Executive Officer, Mr. Ahmed Kuru upon assuming office and reviewing the challenges as well as bottlenecks inhibiting recoveries mounted a strong campaign that the current practice where habitual and recalcitrant debtors are treated with kid gloves, especially by agencies of government would not help AMCON resolve these loans before its sunset date.

According to Justice Auta, the approach to debt recovery and resolution must change at this point in the life of AMCON especially going into 2018 and beyond because the Corporation came as a child of necessity at the time it was created with all the good intentions in the world to recalibrate the beleaguered economy of the country at the time.

In his words: “Nigeria witnessed the 2007 global financial crisis, which was caused by insolvency, illiquidity, poor corporate governance and outright financial crimes. However, with the creation of AMCON by the federal government, no bank has been liquidated, depositors’ funds are safe and no bank has been subject to collection queues. The financial crisis led to the depression in value of the securities created against these defaulting loans thereby leaving the banks with an unfortunate inability to recover their losses. The effect of such monumental exposure was that banks were unable to sustain the equilibrium of lending required to maintain a vibrant economy. This in turn led to higher interest rates and an inability to perform the bank’s primary functions of financial intermediation like the pooling of savings and lending.”

Explaining further he said: “In addition to significant reduction in lending to customers, financial crisis created by non-performing loans can result in breakdown of interbank lending, which in turn leads to drastic drop in liquidity of banks and a consequent reticence or direct inability to advance loans to the broader public. Collectively, these factors create a vicious cycle resulting in a hike in interest rates; concomitant default and insolvency; volatility of currency values; a drop in investments and general stagnation of the economy among other crisis.”

Justice Auta having enumerated the facts argued that it is extremely important for all stakeholders, especially Judges to note the correlation between bank failure, which AMCON saved, and a large concentration of non-performing loans.

He added that Judges have critical role to play in the insulation of the macro-economy from fragmentation since most disputes that relate to banking, which AMCON currently shoulders are presented before them. Describing the AMCON framework as “extremely complex” he said AMCON’s goal can only be accomplished if all stakeholders, especially the entire hierarchy of the bench appreciates the fundamental underpinnings of its regime.

Lending her voice to Justice Auta’s position, Justice Bulkachuwa in her own analogy argued that since the rise of the financial sector is tied to economic growth, Nigeria’s economy, the livelihood and wellbeing of the citizenry are inextricably related to finance. She said all over the world, whenever the economy goes into crisis, governments across the world intervene to stabilise the macro-economy, which AMCON did in the case of Nigeria.

But with what she described as “deliberate reluctance” of debtors to redeem their obligations to AMCON, Justice Bulkachuwa said: “Having realised deliberate reluctance of debtors to redeem their obligations to AMCON, it would seem that AMCON has limited options other than resorting to our courts to enforce its enormous powers towards debt recovery. To recover as much debt as possible within its defined lifespan, expediency is essential if AMCON is to achieve its value maximization and financial stability goals.”

Corroborating the position of the two distinguished Justices, Kuru submitted that AMCON is currently indebted to the CBN to the amount of N4.7trillion, which is more than half of the proposed 2018 national budget. Aside that, more than 70 per cent of AMCON’s Eligible Bank Asset (EBA), portfolio is also locked in one form of litigation or the other meaning that without the support of the judiciary, AMCON cannot see the light of day.

On the back of that, he said there is also a rising number of appeals emanating from trial courts on AMCON cases, adding that at this stage in AMCON’s existence, expeditious determination of appeals brought before the courts remains key to AMCON’s ability to resolve all outstanding assets and prevent the undesired economic consequences of failure to recover the assets. The inability to resolve the debt he argued would have dire implications for the entire Nigerian economy.