The Pervasive Challenge of Unclaimed Dividends in Nigeria’s Capital Market
Nigeria’s capital market, a vital driver of economic growth, faces a persistent challenge: the escalating crisis of unclaimed dividends. Currently standing at a staggering N215 billion, this accumulation of unpaid dividends erodes investor confidence and raises serious concerns about the efficacy of regulatory mechanisms. The mounting backlog, despite the introduction of electronic systems and reforms by the Securities and Exchange Commission (SEC), underscores systemic inefficiencies, registrar lapses, and the complexities surrounding deceased shareholders’ estates, leaving investors frustrated and questioning the market’s integrity. The magnitude of this issue demands immediate and comprehensive action to restore trust and ensure the market’s long-term stability.
The Historical Trajectory and Contributing Factors of the Unclaimed Dividend Crisis
The unclaimed dividend crisis has plagued Nigeria’s capital market for years, with the problem escalating significantly over the past two decades. From a relatively modest N2.09 billion in 1999, the figure ballooned to N90 billion by 2015 and has continued its upward trajectory, reaching N158.44 billion in 2019, N177 billion in 2021, and now a staggering N215 billion. This dramatic rise reveals deep-rooted systemic flaws, including outdated processes, inadequate record-keeping by registrars, and significant barriers to claiming dividends, all demanding urgent and effective reforms. The introduction of the e-dividend system, designed to streamline dividend payments, has yielded some improvements but has failed to fully address the core issues. Registrars, tasked with managing shareholder records and processing payments, have been criticized for their inefficiencies, contributing significantly to the problem. Furthermore, the increasing number of deceased shareholders whose families remain unaware of their investments adds another layer of complexity.
Challenges Faced by Shareholders and the Impact of Deceased Investors
Shareholders face significant hurdles in claiming their dividends, particularly the families of deceased investors. While the e-dividend system has provided some relief in accessing funds, it hasn’t eliminated all challenges. Bisi Bakare, National Coordinator of the Pragmatic Shareholders Association of Nigeria, highlights the difficulties faced by families of deceased shareholders in navigating the complex requirements imposed by registrars. Many families remain unaware of their deceased relatives’ investments, leaving dividends unclaimed indefinitely. Furthermore, irregularities stemming from the privatization era, such as shareholders using different names for their investments, contribute to the difficulty in tracing and claiming dividends. These issues underscore the need for improved communication and simplified processes for accessing dividends, especially for the heirs of deceased investors.
Registrar Inefficiencies and Calls for Accountability
Investor criticism of registrar inefficiencies has been widespread. Mathew Akinlade, President of the Noble Shareholders’ Solidarity Association, points to instances where registrars created multiple accounts for the same individual, leading to confusion and unclaimed dividends. He calls for greater accountability from registrars and improved record-keeping practices. Moreover, he argues that unclaimed dividends should revert to the paying company after the statutory period rather than being claimed by the government, emphasizing that the government has already received its share of profits through taxes. These criticisms highlight the need for stricter oversight of registrars and streamlined procedures to prevent such issues and ensure efficient dividend disbursement.
Grassroots Investors and the Need for Enhanced Support
Minority shareholders, often lacking the resources and expertise to navigate complex bureaucratic processes, face even greater challenges. Ariyo Olugbosun, a shareholder, recounts his struggles with registrars, citing missing signature records and a lack of coordination among key players. He stresses the need for SEC intervention to hold registrars accountable and improve their communication with shareholders. The difficulties faced by grassroots investors highlight the importance of targeted awareness campaigns and simplified processes to ensure equitable access to dividends for all shareholders.
Proposed Solutions and the Path Forward
Stakeholders are advocating for a multi-pronged approach to resolve the unclaimed dividend crisis. Boniface Okezie, National Coordinator of the Progressive Shareholders Association of Nigeria, calls for legislative reforms, including reviewing the statute of limitations on unclaimed dividends as outlined in the Companies and Allied Matters Act. He also emphasizes the need for extensive public awareness campaigns, particularly targeting grassroots investors. These recommendations, coupled with calls for improved record-keeping, stricter oversight of registrars, and a more user-friendly e-dividend portal, offer a roadmap for addressing the crisis and restoring investor confidence in the Nigerian capital market. The SEC’s renewed focus on leveraging technology and resolving legacy identity management issues through a dedicated market-wide committee reflects a positive step towards a more efficient and transparent system. However, sustained and coordinated efforts are essential to fully resolve this pervasive challenge and unlock the full potential of Nigeria’s capital market.
