Nigeria to shut down National Economic Reconstruction Fund over $48 million bad loans


By Staff | This Day, Nigeria October 6, 2017

The federal government has initiated plans to shut down the National Economic Reconstruction Fund (NERFUND) over non-performance and non-performing loans (NPLs) of over N17.5 billion.

A source at the Ministry of Finance informed the News Agency of Nigeria (NAN) Thursday in Abuja that a committee had already been set up to oversee the smooth liquidation of the company by the end of October.

The source said the committee was expected to come up with recommendations to cater to the welfare of the NERFUND workers and advise on what to do with the fixed assets of the financial institution.

The committee is also expected to recommend an agency that would handle the numerous pending court cases initiated by NERFUND to recover billions of naira in bad loans.
According to the source, about 1,143 projects in the small and medium enterprises sector were financed by NERFUND between 2010 and 2013.

The source said NERFUND had encountered problems recovering the loans, adding that of the N17.5 billion in NPLs, N14.2 billion representing 80 per cent was borrowed by a few individuals and firms.

He said the ratio of NPLs was high because many of the loans were not collateralised.
A member of staff of the institution who preferred anonymity told NAN that all workers of the oraganisation had been officially informed about the winding up.

“We have been given the choice to either resign or be sacked. The managing director told us that management is working with the permanent secretary of the federal ministry of finance.

“They have promised that at the end of the day, we will not be jobless. They will place us somewhere else, so we are expectant,” the person said.

NERFUND was established by Decree No. 2 of 1989 to act as a catalyst for the rapid rise of productive enterprises in the country with a seed capital of N300 million..

In 2002, the federal government merged Nigerian Industrial Development Bank (NIDB) and Nigerian Bank of Commerce and Industry (NBCI) to form Bank of Industry (BoI).

The government excluded NERFUND from the fusion of all development finance institutions (DFIs).

However, the agency’s capital had grown to billions of naira, but due to poor management, the organisation has been comatose since late 2013, losing its capacity to carry out its mandate.

In June 2016, the staff of NERFUND took to the streets to protest the mismanagement of the agency’s funds.

In order to forestall a breakdown of law and order, the government through the Minister of Finance, Kemi Adeosun, intervened by first shutting down the agency, following the failure to reconcile the differences between the executive management and staff.

Two weeks after the closure, Adeosun instructed the members of staff to return to work and appointed Dr. Ezekiel Oseni in August of the same year to act as managing director.
Just one year into his appointment, the federal government has finally approved the winding up of the institution.

Related stories


AsokoNews Brief

Sign up for our weekly Africa Business Digest, highlighting the Top 5 stories per sector