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AMCON to sell Enterprise, Mainstreet banks October

By on February 27, 2014

The Managing Director, Asset Management Corporation of Nigeria, Mr. Mustafa Chike-Obi, has said that the agency will sell two of the three nationalised banks this year.

Specifically, he said Enterprise Bank Limited would be sold in June and it would be the turn of Mainstreet in October.

“We believe that at least two of the bridge banks will be sold this year. We have to make sure it is done properly. Enterprise should be sold in June; and Mainstreet by October,” Chike-Obi said.

The rescued or bridge banks are Enterprise Bank Limited (formerly Spring Bank Plc); Mainstreet Bank Limited (Afribank Plc); and Keystone Bank Limited (Bank PHB Plc).

AMCON had a few weeks ago made a U-turn on its proposal to sell the three rescued banks this year, saying it was not realistic to conclude all the deals in 2014.

AMCON, created in 2010 shortly after the banking crisis to manage the toxic assets in banks, had last year said it would sell the three banks on or before the third quarter of this year.

The AMCON boss was the guest lecturer at the Hallmark Public Policy Forum on Monday.

Chike-Obi, who spoke on the topic ‘Emerging market challenges and the imperatives of economic reforms’, said the generic challenges facing emerging markets such as Nigeria had to do with lack of adequate capital and competence with the problem of destructive culture.

He said the country needed to utilise its unused borrowed capacity of at least N28tn to enable it to join the league of developed countries.

He said, “When I talk about borrowing, Nigerians have aversion to borrowing because there is a history of wasted money. But let me give you a few numbers you should bear in mind. When our GDP is rebased this year, we will have a public to the GDP of roughly 12 per cent. The international standard is 60 per cent public debt to the GDP.

“If you look at countries like the United States, India, Brazil, they are well over 60 per cent public debt to the GDP. Some of them are even closer to a 100 per cent public debt to the GDP.  So if we go from 12 to 60 per cent public debt to the GDP, that means an unused borrowing capacity of N28tn that Nigeria is not using. It is also a fact that no nation has developed with a public debt to the GDP ratio of under 60 per cent anywhere and anytime in the world. It is not possible.”

The AMCON boss said it was high time the country declared employment emergency, noting that the nation’s unemployment rate was alarming.

According to him, the country appears sitting on a time bomb except something was done about the state of unemployment.

He said, “Let me go into the Nigerian problem in a much detail. I think we are in a very critical period of our economy. I do not share the view that things are getting better. I think things are getting much worse very fast. We have to confront a critical problem in Nigeria, which is that we are a 170 million people, growing at 3.5 per cent a year; which is roughly six million Nigerians a year. Based on the model you wish to employ, that means you have to create r approximately four million jobs for those people a year.

“In addition, we have a backlog of unemployed people. Every Nigerian parent today is very concerned about jobs for their children. And we need to create six million new jobs a year. This problem is very exponential. If you don’t address it today, five years from now, you have to create eight million jobs a year. At that point, I don’t think the society will hold. We have an employment emergency in this country.”

[Punch]