Bad Debt in Nigeria – The Case of an Able but Unwilling Debtor


Wednesday, June 01, 2016 8.32AM / Abuja News Investigations

The bank and customer relationship is premised on an irrebuttable cordiality, with a give and take understanding. Often, this relationship is tested during loan/debt recovery processes. From banks seeking to reduce charges arising from perfection of security titles, credit officers gaming the system or working in collusion with lenders to circumvent credit processes, absence of an integrated credit bureau to debtors who simply do not intend to pay back loans thus placing genuine debtors facing repayment challenges in the same collection process bind.

Across the nation, tales abound of numerous cases of frustrated debt recovery efforts leading to a slower rate of recovery using conventional methods. For those who have been able to achieve some measure of success; a recourse to unconventional methods or extra-ordinary actions had been deployed by collection agents, including the use of asset tracing specialists and enforcement agencies.

Yet, for all the meager success achieved to date, there are debtors who have found a way to use unconventional methods, privilege and  power to thwart recovery efforts.  

Such was the case when an Abuja based law firm got a brief to collect debt owed a bank from a recalcitrant debtor, who was able but unwilling to pay.

These same relationship was extended to a director of DI, based in Chiromawa, Kano State, Nigeria, by a popular bank in Nigeria with a rich history and national spread. The director of the company, applied for and was in 2002 granted a credit facilities in the sum of N50million (Fifty Million Naira) only; using one of his properties at Apo legislative quarters, Gudu Apo-Abuja, as collateral to secure the loan facility.

The debtor deposited only the photocopy of the certificate of occupancy (C of O) title documents with the bank, and retained the original copy, which ought to have been a red flag to the credit department as it enhanced the ability to make recovery smooth; especially where non repayment as a motive can be adduced.

Two years after the brief and after several demand(s) letters to the debtor (Director of the Company) to pay up his indebtedness and the accrued interest, no traction has been gained.

Rather, the debtor put up a defence that:

"he never transacted any business with the bank…… he never collected any loan from the bank…. he never used his property as collateral with the bank and finally,…. he doesn’t have an idea of the company under reference".

Here are the facts deduced from the file records and review of transaction.

At the time of granting the director a loan credit facility, a proper legal search was conducted on the company and the property under reference and it was affirmed that the property pledged belonged to the debtor with all necessary details attached. The C of O title document used as collateral bears the debtor's picture photograph and signature as can be verified from the Abuja Geographical Information System (AGIS).

When all effort to recover the debt through a bank –customer liaison failed, the bank briefed the law firm on the recovery of the loan granted.

Upon formal briefing, the law firm deployed conventional procedures and necessary steps to demand / recover back the bad loan for the bank, serving the debtor with demands and final demand notices.

The debtor took an action that shocked both the principal and law firm – he made threats in colourful terms thus:

"when he (debtor) was in Lagos State back then, he (debtor) sent a lawyer into the lagoon with the law suit file, and today nobody heard about the lawyer anymore, and if you (lawyer) fails to desist from demanding same loan credit facility, he (debtor) will send him (the lawyer) to the Jabi-lake in Abuja”.

To date, the debtor continues to reside in the Apo-legislative property where it has now become difficult to consider paying him a visit or seeking to demand a repayment of his default loan credit facility granted him since 2002, fourteen years ago.

How then should this play out or a resolution sought?

We understand that the law firm, being left with no other viable options, have engaged the services of EFFC, Nigeria’s anti-graft agency to wade into the case and purport treat to life made by the debtor. In such matters it would be one mans’ words against another as it was not recorded nor a deposition made in court at the time of the incident; save for the petition sent to the anti-graft agency.

Having petitioned the EFCC (copy not sighted) over the corruption and criminal tendency, the law firm waited for several months without any response from both the anti-graft agency and the debtor. Following reminders, and attachment of acknowledged copies of the petition, the anti-graft agency invited the law firm for discussion/interrogation on the subject matter in 2014 without the debtor and till date, no action or details on the matter has been heard.

Thus, the debtor file continues to gather dust in the cabinets of the anti-graft agency while the debtor continues his normal endeavour without any recourse to the debt outstanding, now making up one of the numerous Non-performing loan balances (NPL) in the banks books.

What happens next is anyone’s guess but if the current efforts of AMCON is to bear fruit and serve as a template for improved debt collection in the country; a lot is expected from an already over stretched anti-graft and SFU agency(ies).

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