ASSET MANAGEMENT COMPANY OF NIGERIA: MATTERS ARISING

Alawiye-Adams, Adewale and Babatunde, Afolabi ASSET MANAGEMENT COMPANY OF NIGERIA: MATTERS ARISING. Working Paper. SSRN, ABUAD.

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Abstract

The main thrust of this study is to critically analyze the issues, challenges and prospects that the Asset Management Company of Nigeria (AMCON) faces in resolving the unwarranted critical liquidity challenges the Nigerian Banking Sector found itself and matters arising thereof. There is no gainsaying the fact that in Nigeria like several countries of the world, the effects of the global economic downturn permeated and negatively affected both the Nigerian Stock Exchange and the Banking sector where toxic assets worth approximately $10 billion of toxic assets were held by banks whose assets suffered serious capital erosion due to market failures and poor quality lending decisions. This study examines the intervention of the Central Bank of Nigeria through the Assets Management Corporation of Nigeria Act 2010 (AMCON Act) and employs as a deliberate strategy, an analytical exposition of the Act. The study observed the partial or complete non- adherence to the codes of corporate governance, poor and faulty credit processing, management and control caused the ‘global’, Nigeria banking sector crisis. It opines that though the provisions of the AMCON Act are aimed at compelling the observance of codes of corporate governance and international best practices, to correct the inherent weaknesses in capital structure and the resulting liquidity quagmire, which the financial system strongman forcefully enabled with superior legislations., but there are still big question marks on its applicability and effectiveness. All these are issues reviewed in the first part of the study. The second part of the study expressed a measure of faith in the capability and potency of the AMCON institution to resolve the issue of financial distress and undercapitalization, if properly applied, it therefore looked at AMCON, issues related to its effective application and functioning; the seemingly compelling need for its invocation this time around, by the financial regulatory authorities. The third part of the article analyzed the anxieties, doubts, lack of trust and suspected double standards that tends to make AMCON as presently constituted seem as being used as a smokescreen by the financial regulators to achieve some hidden agenda, in the banking system. The study recommends among other things, administrative and operational autonomy for AMCON, strict and full compliance with its codes of corporate governance and that the government should provide a suitable enabling

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