Current Perspectives in the Recovery of Bank Loans in Nigeria

Prior to the independence of Nigeria in 1960, commercial lending in Nigeria was basically non-existent as the economy was mostly subsistent agriculture. However, the growth of trade between the United Kingdom and the West African sub-region inevitably led to the establishment of the African Banking Corporation in 1891 by Elder Dempster Company, a shipping conglomerate in Lagos, Nigeria. Progressively, many corporations in manufacturing, telecommunications, banking, oil and gas, retail and other businesses merged and started utilising facilities of banks for expansionary purposes or for other operational purposes. However, due to frequent policy somersaults, poor management, predatory lending practices, general economic meltdown and macro-economic headwinds, companies started defaulting on the facilities and the creditors have had to realise their securities. Some of the statutory provisions and cases on the process and laws on recovery of debts have been subjected to conflicting interpretations partly because of the multitude of institutions and laws on the subject. Nevertheless, there is the underlining objective of maintaining the principle of separate legal entity of companies and also ensuring that creditor’s assets are recovered. This paper essentially considers the laws and cases and the emerging framework of realisation of secured and unsecured credits. In this paper, there is focus on bank lending and the institutional regulations which have developed as a result of growing Non-Performing Loans (NPLs) and bank failures