Nigerian investors and shareholders are having something to smile about despite the challenging equity market as a push by the Securities and Exchange Commission (SEC) to solve the huge problem of unclaimed dividends is gaining traction.
Shareholder accounts have now been credited to the tune of N29.274 billion between November 2015 and October 2016, reducing the amount of unclaimed dividends by 36 percent.
“Investors can now get unclaimed dividends from the past five years. The e – dividend registration must go on as it is in the best interest of the retail investor,” said Mounir Gwarzo, the Director-General (DG) of SEC, in an interview in Lagos on the sidelines of the events marking the end of the capital market committee meeting for the third quarter of 2016.
The Nigeria SEC had earlier this year embarked on a major push to end the growing problem of unclaimed dividends of equity market investors estimated at N90 billion at the end of 2015.
This is now being achieved using electronic dividends that are paid directly into investor bank accounts which can be either savings or current accounts.
The SEC is driving the E- dividend move in collaboration with the Central Bank of Nigeria (CBN), Committee of Heads of Bank operations, Institute of Capital Market Registrars and the Nigeria Interbank Settlement System, to ensure that all dividends are now to be paid into bank accounts of investors that have completed the electronic dividend registration.
SEC has also agreed to underwrite the cost of registration up to December 2016, according to Gwarzo.
Meanwhile, there has been an astronomical jump in the number of investors in Nigeria’s capital markets who have registered for the electronic dividend mandate, which has helped to reduce the unclaimed dividend amount.
“There were less than 10,000 people registered for the e-dividends, now about 1.4 million have been mandated,” Samuel Oluyemi, Senior Manager for Vertical Markets Group at the Nigerian Interbank Settlement System (NIBBS) said.
“We now have a means of uniquely identifying investors in Nigeria’s capital markets using the Bank Verification Number or BVN.”
SEC and market operators have agreed that by 31st June 2017, no registrar will issue paper dividend warrants.
The E-dividend push by the SEC is part of a series of programmes aimed at building back retail investor confidence in the markets.
Domestic investors accounted for 55.44 percent or N513.93 billion in transactions on the Nigerian Stock Exchange (NSE) between January and September, 2016 according to data from the bourse.
Of the amount, domestic retail investors were responsible for N233.61 billion in transactions, equivalent to 45.4 percent, with domestic institutional investors making up the rest.
The SEC was leading the push to get the capital markets to be more pervasive and effective, according to Bola Ajomale, CEO of NASD an OTC exchange that eases secondary market trading of unquoted Nigerian companies.
“Crowd funding is also beginning to be looked at, as we need ideas and small companies to be able to get seed and growth capital,” Ajomale said.
Meanwhile, the Minister of Finance, Kemi Adeosun has agreed to be a member of the Capital Market Master Plan Implementation Council (CAMMIC), according to the SEC DG.
“This has helped push some of the initiatives we are pursuing, such as making the SEC the first point of call for any institution (supranational or sub national) seeking to raise debt capital and collaborating with the Federal Inland Revenue Service (FIRS), to reduce double taxation on capital market products to spur further growth of our markets,” Gwarzo said.
PATRICK ATUANYA
