6.

Benchmarking and International Experience

Zimbabwe (ZAMCO) State-owned (a special purpose vehicle created by the central bank)

Ghana (NPART) State-owned (a temporary public asset management company)

Nigeria (AMCON) State-owned (government agency wholly owned by the Federal Government of Nigeria
through the Ministry of Finance Incorporated)

Angola (Recredit) State-owned (a public joint-stock company, 95% owned by the Angolan State)

China (Big Four) State-owned (government-owned, not by the banks)

Malaysia (Danaharta) State-owned (wholly-owned by the government through the Ministry of Finance)

Korea (KAMCO) State-owned (the only government-owned asset management company in Korea)

Thailand (BAM) State-owned (FIDF holds 99.99% shares, essentially a state enterprise)

Vietnam (VAMC) State-owned (100% state-owned single-member LLC, controlled by the central bank)

Mixed: Private ARCs (e.g., Arcil, Edelweiss) and a government-backed entity (NARCL)
India (ARCs)
owned by state-owned lenders

Indonesia (PPA) State-owned (initially fully-owned by the government, now a subsidiary of Danareksa)

Ethiopia (Proposed
Bank-owned (to be wholly-owned by DBE as a subsidiary, not a state-owned AMC)
Revitalized ECI)
6.4 Comparative Analysis
Comparative Table of Global AMCs
Country / Primary Time-Bound Recovery Capital Legal Recovery
AMC Mandate Feature Approach Structure Framework Outcome
Multiple strategies:
loan restructuring,
10-year sunset
interest rate Successfully
Zimba Acquire NPLs period (2014-202
reductions, Government-fund wound down ahead
bwe from banks; 5). Wound down Established
repayment holidays, ed through of schedule after
(ZAMC restore bank ahead of schedule by RBZ Act.
debt-asset swaps, Treasury Bills. paying off
O) lending capacity after paying off
negotiated obligations.
obligations.
settlements, forced
sale of collateral.
Nigeria Acquire No binding sunset Purchased NPLs at Government-fund Established Successfully
(AMCO non-performing clause, although a discount; used ed through the by the stabilized the
N) loans (Eligible originally debt restructuring, issuance of AMCON Act banking sector and
Bank Assets) expected to wind asset sale, litigation, zero-coupon No. 4 of 2010 prevented systemic
from distressed down within 10 and receivership. bonds backed by (as amended collapse.
banks; stabilize years, AMCON Also took over the Central Bank in 2015 and Recovered over
the financial remains management of of Nigeria; banks 2019). 87% of loan values
system; prevent operational after operating contribute 0.5% Granted purchased.
systemic 15+ years, with companies (e.g., in of total assets extensive However, still
collapse; restore multiple aviation), often annually to an powers, carries over N4
bank lending extensions. The criticized for lack of AMCON sinking including the trillion in
capacity. 2015 Amendment sector expertise. fund (a ability to take outstanding debt as
Act did not permanent levy). over assets of 2025, with no
include a without court clear exit.
mandatory orders
dissolution date. (controversial
).
Ghana Acquire Six-year Enterprise Government-bac Established Recovered ~10%
(NPART) non-performing statutory restructuring, ked and funded by dedicated above its target and
assets from life (1990-1996) liquidation of as part of a law (PNDCL improved
state-owned with possible non-viable entities, World 242); granted state-owned bank
banks; facilitate one-year debt workouts, Bank-supported legal powers health,
 representing
restructuring and rescheduling, and tax
extension. program. “satisfactory
recapitalization. conversion. exemptions.
performance”.
State-owned Established
Acquire NPLs No explicit sunset Recovered 48% of
Active collection credit company; by
from banks; clause; continues investment (139.13
Angola and credit recovery; invested €270.2 government
clean bank operations with billion kwanzas by
(Recredit legally authorized million in decree to
accounts to free potential 2025); net profits
) to take borrowers to acquiring two manage
up capital for expansion to 53.3 billion
court. BPC portfolios BPC’s toxic
core lending. private sector. kwanzas (2025).
(2006 and 2017). assets.
Initially given Initially
Funded by credit
a 10-year policy-mandated Established Disposed of 509.4
Remove bad from the People’s
lifespan (1999-20 NPL disposals; later by State billion yuan worth
loans from Bank of China
China 09). However, diversified into Council of NPLs by 2006,
state-owned and 10-year
(Big mandates commercial asset decree; recovering 19.5%
banks ahead of bonds held by
Four) extended and later management, governed by cash; but AMCs
their stock state-owned
evolved into investment banking, AMC later departed from
market listings. banks. Mostly
full-service and other financial regulations. original mandate.
state-controlled.
financial groups. services.
Established
by Danahart
Managed NPL a Act (special
Acquire NPLs No explicit sunset Funded by Recovered
portfolio valued at legislation
from financial clause; continued government; RM30.35 billion
Malaysia RM52.42 billion granting
institutions; as residual asset operated with (58%) of RM52.42
(Danahar face value; unique
maximise manager after core dedicated billion face value;
ta) recovered RM30.35 powers, e.g.,
recovery value mission Danaharta Act net loss RM1.14
billion (58%) over ability to
of assets. completed. legal framework. billion.
its lifetime. override
creditor
rights).
Korea Purchase NPLs No explicit sunset Highly efficient State-owned Established Successfully paid
(KAMC from financial clause; continues NPL resolution; corporation; by back 3 trillion won
O) institutions; operations as paid back 3 trillion government-back government of public funds to
 decree;
provide won of public
operates
corporate state-owned asset funds; provided
under Korean
restructuring management corporate ed funding. government.
asset
advisory corporation. restructuring
management
services. advisory.
laws.
Active management Nationwide
Acquire NPLs
of NPLs and NPAs; Publicly listed Licensed operations;
and NPAs from No explicit sunset
develops foreclosed company; funded AMC; multiple successful
Thailand financial clause; operates as
properties to meet through capital supervised by joint ventures;
(BAM) institutions for ongoing
market demand; markets and the Bank of reported net profit
management or commercial AMC.
forms joint ventures partnerships. Thailand. 1.69 billion baht
disposal.
with banks. (2025, 57% YoY).
100%
Acquire NPLs Purchases NPLs Established
No explicit sunset state-owned Acquired VND
from credit using special bonds; by State Bank
clause; continues one-member 38.9 trillion NPLs
Vietnam institutions as a delegates collection; of Vietnam
as state-owned limited liability by December
(VAMC) 100% plans to establish decision
asset management company; initial 2013; continues
state-owned bad debt exchange (2013); 100%
company. charter capital operations.
LLC. platform. state-owned.
VND 500 billion.
Privately owned
ARCs (e.g.,
ARCIL, Governed by
Acquire NPLs Edelweiss ARC) RBI
No explicit sunset Asset reconstruction Mixed
(NPAs) from plus guidelines
clause; ongoing through acquisition performance; some
India banks and government-back (SARFAESI
commercial and resolution; ARCs successful,
(ARCs) financial ed NARCL; Act, 2002);
operations under operates under strict others closed due
institutions for funded by private licensed and
RBI regulation. RBI regulations. to challenges.
resolution. equity, security regulated by
receipts, and RBI as ARCs.
sovereign
backing.
Indonesi Acquire NPLs No explicit sunset Acquires NPLs State-owned asset State-owned Helped BTN
 AMC;
from
clause; continues from state-owned governed by
state-owned reduce NPL ratio
as ongoing banks; collaborates management Indonesian
a (PPA) banks; support to below 3%
state-owned with banks for company. asset
banking sector (2023).
AMC. resolution. management
stability.
regulations.
Requires
DBE equity specific
Designed with a
Active asset injection (via regulation or Aims to reduce
Ethiopia Acquire DBE’s fixed lifespan
management (rent, EIH), legal DBE’s NPL ratio
(Propose NPLs and (e.g., 10–15 years)
rehabilitate, sell, supplemented by amendment to and generate
d acquired assets; and mandated exit
liquidate), not government-back permit a recovery value
Revitaliz clean DBE’s strategy (depends
passive ed long-term solvent bank from billions of top
ed ECI) balance sheet. on the bank’s long
warehousing. bonds or DFI to transfer NPL cases.
term desire.
loans. assets to its
subsidiary.
Key Lessons from Global AMC Experiences

1. A Dedicated Legal Framework is Essential

Ghana's NPART was established by its own law (PNDCL 242) and granted legal powers and tax
exemptions, which was critical for its operations. The Danaharta Act in Malaysia even gave the
AMC powers to override certain creditor rights. For Ethiopia, this means a revitalized ECI would
need a specific regulation or amendment to Proclamation No. 97/1998 to permit a solvent bank
to transfer assets to its subsidiary. This Aligns with ECI.

2. A Clear, Time-Bound Mandate Drives Success

Zimbabwe's ZAMCO succeeded because it had a 10-year sunset clause and actually wound
down ahead of schedule. Ghana's NPART operated within a six-year statutory life. China's
original 10-year lifespan for its "Big Four" AMCs was extended, and the AMCs evolved into
full-service financial groups, departing from their original mandate. This demonstrates
that without a binding sunset clause, an AMC may drift away from its core purpose. Aligns with
ECI.

3. Government or Central Bank Funding is the Norm

Almost all successful AMCs were government or central bank funded (ZAMCO, NPART,
VAMC, KAMCO, PPA). Angola's Recredit is state-owned and invested €270.2 million to
acquire two NPL portfolios. Private ARCs in India have faced significant challenges, and some
have closed due to regulatory pressures and shrinking asset pools. This suggests that for a
development bank's subsidiary, state-backed funding is likely necessary. Aligns with ECI.

4. Active Recovery Strategies Generate Value

Malaysia's Danaharta recovered 58% of the face value of its NPL portfolio. Angola's Recredit
recovered 48% of its initial investment. Indonesia's PPA helped BTN reduce its NPL ratio to
below 3%. All these examples used active management rather than passive warehousing.
Thailand's BAM acquires NPLs and actively develops foreclosed properties to meet market
demand. This directly supports ECI's proposed model of active asset management. Aligns with
ECI.
5. Beware of Mission Drift and Governance Failure

China's "Big Four" AMCs, after completing their initial policy mandates, were allowed to
diversify into investment banking and other profitable activities. Their balance sheet expansion
was driven mostly by non-core and more profitable activities, making it more difficult for them
to continue performing their original NPL resolution function. Indonesia's SAMCOs remain
stuck in bureaucracy and legal bottlenecks, with slow courts (foreclosure taking 18–24 months)
and weak land title systems. These cautionary tales highlight the need for strict governance,
performance-based incentives, and a clear exit strategy to prevent mission creep. Aligns with
ECI (can be structured to avoid these pitfalls).

6. Market-Based and Private AMCs Face Challenges

India's experience with Asset Reconstruction Companies (ARCs) shows that privately owned
ARCs have faced significant headwinds, including shrinking asset pools, regulatory hurdles, and
exits by major global funds like Bain Capital and Apollo. The government-backed NARCL has
increasingly dominated the space. This suggests that without government backing, private ARCs
struggle to compete and sustain operations. A revitalized ECI, with its state-owned parent
(DBE), would align more closely with the government-backed model. Aligns with ECI.

7. The Danger of an Indefinite Mandate and Permanent Fiscal Burden

Nigeria’s AMCON, while successful in stabilizing the banking sector and achieving a high
recovery rate (over 87%), demonstrates the risks of establishing an AMC without a legally
binding sunset clause.

Key challenges from AMCON:

 No binding sunset clause: AMCON was expected to wind down within 10 years, but the
AMCON Act did not stipulate a mandatory dissolution date. It remains operational over
15 years later, with no clear exit.

 Massive outstanding debt: As of 2025, AMCON still carries over N4 trillion in

 Mission creep: AMCON has taken over management of operating companies in sectors
where it lacks expertise (e.g., aviation), leading to operational setbacks and criticism.

Lesson for Ethiopia: A revitalized ECI must include a mandatory, legally enforceable sunset
clause (e.g., 10 15 years) to ensure timely wind down. It should also avoid creating a permanent
levy on DBE; ECI’s revenue model must be self-sustaining from fees and recovery proceeds.
Aligns with ECI (can be structured to avoid AMCON’s pitfalls).

Thus, the ECIs purpose and mandate is said to be aligned with the international experience in
that:-

Successful African AMC models (AMCON, ZAMCO) Zimbabwe's ZAMCO succeeded with
a clear 10-year sunset clause and wound down ahead of schedule. A revitalized ECI can adopt
the same time-bound design.

Proven capacity to restore bank lending: Angola's Recredit explicitly cleans up bank accounts,
making them healthier and freeing up capital for core lending. This is the same goal for DBE.

Can effectively reduce NPL ratios: Indonesia's PPA helped BTN reduce its NPL ratio from
3.53% to below 3%. Ghana's NPART improved state-owned bank health.

Requires dedicated legal framework: Malaysia's Danaharta, Ghana's NPART, and India's
ARCs all operated under specific legislation or regulatory frameworks. ECI would require a
similar dedicated legal basis.

Mission drift is a real risk: China's AMCs departed from their original mandate and diversified
into non-core profitable activities, making it harder for them to continue their original NPL
resolution function. Ethiopia must avoid this by imposing strict governance and a binding sunset
clause.

Time-bound mandates prevent indefinite state burden: ZAMCO wound down ahead of
schedule. NPART had a six-year statutory life. In contrast, China's "Big Four" AMCs, without a
binding sunset clause, became permanent financial groups. A revitalized ECI must include a
mandatory sunset provision.

Government backing is a competitive advantage: India's experience shows that private ARCs
struggle, while government-backed NARCL dominates. ECI's state-owned parent (DBE)
provides a similar advantage.