There are indications that the Federal Government may shut down the operations of the National Economic Reconstruction Fund this month (October) as a result of huge non-performing loans.
Sources at the agency confided in our correspondent on Friday that already, the Ministry of Finance had made its intention to close the agency known to its Acting Managing Director, Dr. Ezekiel Oseni.
Oseni was appointed in August last year in acting capacity to recover the outstanding loans and reposition the firm for greater efficiency.
A top official at NERFUND told our correspondent that many workers would be affected by the planned closure.
The source said the acting MD communicated the decision of the ministry to the workers during a meeting held three weeks ago.
The source, who spoke on condition of anonymity because he was not officially permitted to talk on the matter, added, “Three weeks ago, the MD of NERFUND called the workers to a meeting and informed them about the plan to close down NERFUND.
It was learnt that shortly after he assumed office, Oseni had sought the services of the Economic and Financial Crimes Commission in the recovery of its non-performing loans estimated at about N17.5bn.
About 1, 143 projects in the Small and Medium Enterprises sector were financed with the loans between 2010 and 2013.
He had said during a meeting with the Acting Chairman of the EFCC, Mr. Ibrahim Magu, that the agency was having difficulty recovering its non-performing loans.
He lamented that the inability of debtors to pay loans collected from the agency was making it difficult to achieve its mandate of funding entrepreneurs, creating jobs and supporting the economy.
Oseni said that NERFUND currently had problems recovering the loans, adding that out of N17.5bn, the sum of N14.2bn representing 80 per cent was borrowed by a few people.
He said the ratio of non-performing loans was high because many of the loans were not collateralised.
For instance, he said that while some of the debtors had no collateral, those who had assets to back up their loans had engaged the services of lawyers to frustrate the takeover of such assets.
He said, “We can no longer support entrepreneurs owing to the fact that we gave out loans of N17.5bn and they are yet to be paid back. While the small customers who collected between N1m and N2m have started repaying, we are having difficulty in recovering the huge loans from the big customers who took N50m and above.
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“Some of these big customers borrowed this money without collateral through the influence of politicians and they don’t want to pay back because they feel its government money. We have reported them to the EFCC and we want to plead that it should assist us with a special task force to go after these people.”
He said the inability of the debtors to repay the loans was affecting the operations of NERFUND as some members of staff were relieved of their duties about a year ago owing to financial constraints.
He said if the development should continue, more workers would be asked to go this year as the agency was not enjoying any budgetary allocation from the Federal Government.