Democratic Socialist Movement

For Struggle, Solidarity and Socialism in Nigeria

By - DSM



By Chinedu Bosah

President Goodluck Jonathan signed into law the establishment of the Asset Management Corporation of Nigeria (AMCON) on Monday 19, 2010. The firm which is aptly described as ‘Bad Bank’ by the Financial Times is to absorb most of the existing N1.2 trillion non-performing loans and other bad loans in the future. The Central Bank of Nigeria (CBN) expended N620 billion of public funds in 2009 to bailout 8 banks (Intercontinental Bank, Afribank, Oceanic Bank, Union Bank, Finbank, Spring Bank, Bank PHB and Equitorial Trust Bank). AMCON was formed to legitimize the fraudulent capitalist policy of making taxpayers and workers to bear the financial crisis created by the top bankers and capitalism.

According to the President while signing the bill into law, AMCON will help to stimulate recovery of the country’s financial system from crisis by boosting the liquidity of troubled banks through buying their non-performing loans. In other words, the firm was created to bailout parasitic bank executives and other privileged individuals who regularly engage in corrupt sharp practices and waste. Besides, it is meant to indemnify local and international speculators who invest in the financial sector to reap huge profits.

It has been reported that commercial banks are expected to contribute 0.3 percent of their total assets annually in addition to the contribution from the CBN. The fact remains that the commercial banks that have been plunged into crisis may most likely not honour their own part of contribution leaving the CBN to use public funds in bailing out the banks. Even when banks contribute, it doesn’t stop the recklessness and sharp practices of the bank executives since at the end of the day, it is depositors that will pay.

The banks all along have not been lending money to the manufacturing sector other than to stock market speculators, non-productive businesses like showbiz and motivational programme, political office holders and privileged individuals. Though, about N110 billion was recovered from debtors after the arrest of some of the affected bank executives, the rest appears to have been abandoned. Most brazen is the granting of a N31.134 billion debt waiver by Intercontinental Bank to 15 of its privileged customers who jointly owed the bank N59.709 billion, after it had sacked 1,500 workers. So far, over 10000 bank workers have lost their jobs not just in the bailed-out banks, but also those cleared as healthy.

No doubt, AMCON cannot be a fundamental safety net for financial crisis which is a natural outgrowth of capitalist drive for profit. It will only guarantee the profligacy and recklessness of a few while the whole economy bleeds leaving the already poor working masses poorer. Banks will only be made to serve the general interest of the economy when the banks and other financial institutions are nationalized and democratically managed by workers. This will ensure planned and massive investment in production and service such that will meet societal needs.